As South African insurance companies seek a way out of Covid-19, they will have to face a new crisis. From now on, insurers will have to pay premiums to policyholders (hotels, restaurants, etc.) who have interrupted their activities for reasons of confinement.

Indeed, the High Court of Cape Town (HCC), on the directive of the Financial Services Regulatory Authority (FSCA) of South Africa, sentenced the insurer Santam at the beginning of the week, thus giving a strong signal to other insurance companies. The South African insurance giant must pay compensation for 18 months to the hotel operator Ma-Afrika Hotels and the Stellenbosch Kitchen restaurant. This, in respect of operating losses linked to the Covid-19 pandemic.

With this in mind, Insurance Claims Africa (ICA), which specializes in claims management, invites other South African insurers to compensate their clients. A decision that is a blow for the majority of local insurance companies. The latter reject these claims, saying that a pandemic is not an insurable event. A situation also complicated for short-term insurers who try not to honor claims for compensation for Covid-19 business interruption.

“We believe now is the time for the insurance industry to step up and display the ethical leadership that has been lacking in its response to this crisis so far,” commented ICA CEO Ryan. Woolly.

Even though South Africa has the fourth largest insurance sector in the emerging markets category, it will have to make efforts to sustain its market from the negative effects of Covid-19.