Santam Announces R1-Billion in Relief to Battling CBI Business Clients

South Africa’s largest short-term insurer Santam has announced today that it will pay up to R1-billion in urgent relief to policyholders in the hospitality, leisure and non-essential retail services industries who have the Contingent Business Interruption (CBI) extension in their policy cover with the company.

The relief payments will be set at a minimum of R25 000 and a maximum of R1.5 million for individual CBI policyholders, and will begin from the first week of August 2020.

Lizé Lambrechts, the Santam Group CEO, said: “We are offering this relief because we acknowledge that the lockdown and COVID-19 pandemic have had a devastating impact on our economy. After careful consideration of the situation, especially the unforeseen length of the lockdown and the ongoing restrictions that are impacting businesses, we decided to assist with a substantial payment commitment to help sustain our policyholders in the most impacted industries.”

The payments will be made to existing policyholders who have claimed for losses during the COVID-19 pandemic period and have CBI extensions in their policies. The aim of the relief payment is to support policyholders who are in financial distress and does not serve as indemnity under a policy contract, said Santam in a media statement on Sunday.

“We remain confident in our interpretation of our policy wording as it pertains to the CBI extension in our cover. However, we also realise that our clients need financial support urgently and that the ongoing court cases on the interpretation of the policy wording may be lengthy,” she added.

Lambrechts said it remains in the best interest of all parties, to obtain legal certainty from the courts, and pointed out that similar discussions are happening around the world.

Should the courts ultimately rule in Santam’s favour and determine that the lockdown is not an insured peril, then the amount paid will still be considered relief payments in respect of registered claims to policyholders and will not be recovered from policyholders.

However, in the event that the courts rule against Santam and determine that the national lockdown is an insured peril, the amount will become an advance payment against any finally determined claims against Santam under the CBI extension. From a Santam perspective, this approach is a demonstration of the company’s brand promise of Insurance Good and Proper, Lambrechts added.

To qualify for relief payment, the policyholders must meet the following criteria:

• They must operate within the industries identified for relief;
• They must have a Santam Commercial or Santam Hospitality & Leisure policy;
• Their policy must have the CBI extension;
• The CBI extension must have been taken out before 18 March 2020;
• The policy must still be in force;
• The policyholder must have registered a claim; and
• They must not be an essential service provider allowed to trade during the lockdown.
• With regard to the court case set for 1 September 2020 at the Western Cape High Court, the company said that it was important that it continues so that all stakeholders can obtain legal certainty on the policy interpretation of CBI insurance cover.

Santam has to date also contributed more than R400-million in COVID-19 funding to provide relief through various initiatives.

The Financial Sector Conduct Authority (FSCA) said it was pleased with the proposed relief payment from Santam and also supports the importance of obtaining legal certainty from the courts.