Insurance Claims Africa (ICA), the public loss adjuster spearheading the fight against insurers over Covid-19 business interruption claims, has lambasted SA's short-term insurance sector for using lawyers to delay settling claims and has hinted it may launch ‘ground-breaking litigation’ against the sector, says a Business Day report.

Armed with research on the short-term insurance sector’s finances compiled by independent economist Roelof Botha, ICA held a virtual media conference yesterday during which it accused the short-term insurance industry of reaping huge windfalls during the pandemic while refusing to pay out claims to clients whose businesses were devastated by Covid-19.

‘The gross inequity of the situation is blatantly prejudicial to claimants who are still awaiting settlement more than one year after the start of the pandemic,’ said Ryan Woolley, CEO of ICA.

‘We believe that insurers are ignoring their clients’ extreme financial anguish and are underestimating the level of dissatisfaction and loss of trust from the delays in settlement.’

ICA is representing more than 850 claimants in the tourism and hospitality sector who are battling to receive final payments from insurers related to business interruption losses linked to Covid-19 and subsequent lockdowns. Insurers, including Santam, Guardrisk and Old Mutual, lost a series of court cases in 2020 for initially refusing to pay out claims linked to Covid-19 business interruption.

In several landmark rulings against insurers the courts ruled the pandemic and the government’s response to it were part of the same insured peril.

Woolley said ICA had sought legal opinion on whether policyholders could seek additional damages beyond those outlined in policies, particularly where they had been caused by delayed or absent claims payouts.

He added that it would be ‘ground-breaking litigation’ in SA.

Full Business Day report

Woolley said his firm had positive interactions with some insurers, including Hollard South Africa, Old Mutual Insure, and some smaller insurers such as Factory & Industrial.

In the middle, according to Woolley in a Fin24 report, are insurers such as Bryte, which has settled hospitality and tourism sector claims but have ongoing disputes with bigger commercial clients such as Clover.

Guardrisk has also paid most of these claims, except where it's still challenging the indemnity period in court.

And then there is Santam. ‘With Santam, we still seem to take two steps forward and two steps back,’ said Woolley.

He alleges the insurer is using various tactics to cut the size of these claims, like not reimbursing its clients for rental rebates they got from landlords, or adjusting for staff salary cuts and other Covid-19 relief benefits received by its customers.

Santam, for its part, vehemently denies this.

Full Fin24 report