If only the king's men had had some bandages.
  • Specialist insurer Guardrisk will be making settlement offer on business interruption claims.
  • The company says about 400 to 700 clients could benefit, with some claims expected to be worth millions of rands.
  • That comes just days after insurers agreed to interim payouts after meeting with the Financial Sector Conduct Authority.
  • For more stories go to www.BusinessInsider.co.za.

Specialist insurer Guardrisk says it will settle lockdown insurance claims with immediate effect.

In a statement, Guardrisk, which is owned by MMI Holdings, said it would be contacting policyholders via their brokers to set out the terms of the offer.

“Although we remain of the firm view that lockdown on its own does not trigger a claim under our policy wording, we will, with immediate effect, be making commercial settlement offers to policyholders who have submitted claims.”

Guardrisk says the settlement offer is “equal to the first three months of lockdown, less the relevant savings and other relief payments received; and there is no limitation on the maximum amount payable.”

In response to questions from Business Insider South Africa, the company said it was too early to estimate the total size of the settlements it may pay as it will “depend on the number of claimants who take up the settlement offer and then based on each individual’s calculation.”

“We understand that the number of clients who could benefit are in the region of 400 to 700, with claims varying from tens of thousands of rand to several millions.”

The move comes just days after insurers agreed to pay out interim relief on lockdown claims following meetings with the industry regulator, the Financial Sector Conduct Authority (FSCA).

READ | There will now be a once-off payout for lockdown insurance claims after regulator steps in

The regulator said it was concerned about the damage to the industry’s reputation after insurers refused to pay out for lockdown claims under business interruption extensions.

The battle of lockdown insurance payouts is set to see another chapter play out in court. After being unable to do business for months, restaurants, bars, hotels, and guesthouses are demanding that their insurers pay out business interruption claims for the financial harm they suffered under lockdown. Some business interruption policies include cover for contagious diseases.

However, some big insurance companies, like Santam and HIC, are hesitant to pay out, claiming that the income losses stem from the government-induced lockdown, and not from the disease itself.

The court battles are just starting - but insurers have lost the first one.

Earlier this month Guardrisk lost a key court battle after being sued by a Cape Town restaurant when it refused to pay out for damage suffered under lockdown.

READ | Big win for restaurants as judge orders insurer to cover lockdown losses

Guardrisk argued that it was lockdown, and not Covid-19 which caused the economic harm to the business – a key argument that the insurance industry has been relying on.

However, this argument was rejected by the judge, who wrote that it "is difficult not to accept that there is indeed a clear nexus between the Covid-19 outbreak and the regulatory regime that caused the interruption of [the restaurant’s] business."

"The suggestion therefore that the regulatory regime was only introduced to 'flatten the curve' and had little to do with the Covid-19 outbreak is misplaced."

Guardrisk announced that it would still appeal the court’s decision, despite the offer of a commercial settlement.

“While it remains our view that the appeal is necessary to obtain certainty for the industry, our business and for our policyholders going forward; the commercial settlement seeks to offer immediate financial support to policyholders in these challenging times,” said the company.

“Policyholders will of course have the option of accepting the commercial settlement offer or waiting for the appeal court ruling.”

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