Illogical reasoning behind claims battle
More than 10 years ago, my Friday morning ritual consisted of a 6am drive to the headquarters of Outsurance for the weekly “claims meeting”.
The meeting was designed to enable claims advisers to table “grey-area” claims for deliberation. These claims would ordinarily have been rejected based on the static reading of the insurance contract. A person who claimed to be living in a gated estate when they lived in something rather different would — based on the reading of the contract — see their claim rejected with no recourse.
The purpose of the claims meeting, however, was to enable all staff members to participate in the deliberations regarding some of the contentious claims. Such meetings would start with the details of the claim, together with the understanding that if all we wanted to apply was the cold wording of the insurance contract then nothing more needed to be discussed and we would reject and move on.
The underlying principle of the meeting was to force us to deliberate on the question of whether rejecting a claim based on technical clauses was in the best interests of the clients or Outsurance itself. The process placed the onus of proving the basis for rejection on the company rather than the client.
Occasionally, in cases where a missed debit order by a client meant the difference between accepting and rejecting a claim, the decision would be to simply collect the outstanding premium then honour the claim.
What I learnt from that process is that far too many insurance clients have a limited understanding of the technical issues associated with a claim. And the legalese of insurance contracts drafted by insurers is much better understood by the company rather than the clients — which is a problem.
This week, Santam says it has agonised over the question of paying out business interruption claims for clients affected by the coronavirus lockdown.
In the high court in Cape Town, Guardrisk lost a case lodged by a restaurant seeking compensation under the business interruption cover. A central pillar of the Guardrisk defence is that the business interruption emanated from the lockdown and not the pandemic. In other words, Guardrisk is of the view that there is no causal link between the pandemic and the decision to implement the lockdown that has crippled businesses.
Santam’s logic gravitates towards the realms of similarly illogical reasoning.
Another defence raised by the insurers is that each business has to prove an actual case of the coronavirus. In other words, the government deciding to implement the lockdown and prevent people from getting infections is being used against restaurants that now, bizarrely, have to prove an actual case of infection linked to their business to be compensated. This invites the inevitable debate regarding the distinction between what is right versus what is legal.
It is clear to everyone that insurers like Santam have a much bigger capacity for litigation than the small businesses that have been paying premiums to them for years. And in the absence of the class-action approach by the affected businesses, none of them would survive the legal marathon to receive any payout anyway.
The more troubling element of Santam ’ s approach is that this is the same entity that prominently displays its contributions to the Solidarity Fund and other commitments aimed at lessening the impact of the Covid-19 pandemic.
In other words, Santam is not immune to the reality of the effect of the pandemic on society. Remarkably, the same people who enabled Santam to be in a position to make contributions to the Solidarity Fund — its own clients — are now about to see the book of technicalities thrown at them when they most need their insurer. Quite odd.