Stop the bickering already!

He is stunned to read that insurance companies are prepared to go to court in an attempt not to pay claims for loss of income due to COVID-19, says Neels van Heerden.

You don’t have to search far online to see people complaining about insurers denying claims. Just the other day I read yet again about an incident where a claim was lodged with a bank after a gate motor was stolen. The quote to install a new motor was R4 500, but the insurer offered to pay out R2 500, because the gate motor was no longer new (are they serious?). Then they also deduct the excess. The term ‘all risk’ is included in every insurance policy, but what does it actually mean? A severe hailstorm breaks the crossbeams of a lean-to and a customer’s caravan below it is damaged. The bank from which the client took out homeowners insurance refuses to repair the lean-to because it hadn’t approved the building plan. (By the way – are all your canopies and shade nets on a building plan?) Their short-term insurer also refuses to cover the caravan’s repair costs. It believes the bank should repair the caravan or a claim should be instituted against the people who built the lean-to. Have you read the fine print for the ‘all risk’ categories of all your insurance products carefully? What exactly do they cover and what is excluded? NO WONDER INSURANCE is described in marketing textbooks as a grudge purchase: it is an emotional experience to take out insurance. When a consumer purchases a product or service, they experience one of two emotions: the first is a feeling of joy because a very important consumer need is being fulfilled. Purchasing a new camping gadget makes you feel good, doesn’t it? The other side of this coin is the sense of dissatisfaction because you know you need to have insurance, but you feel you could rather use the premium for something else that satisfies your immediate needs. That’s why marketers make such a big fuss about the benefits of insurance, and your temper flares when you read that one of the country’s best-known insurers says certain claims will be denied because of the COVID-19 pandemic. It then also warns that it will dispute certain claims until they end up in court. THE INSURANCE CONSULTANT Insurance Claims Africa (ICA), which represents more than 500 businesses in the tourism and hospitality industry, is strongly opposed this. The ICA’s considered opinion is that insurance giants should not exploit vulnerable tourism-related businesses, while the Financial Services Conduct Authority (FSCA) has also taken a strong stance that insurers must comply with all legal claims for business interruption due to the COVID-19 pandemic. I do not believe that any insurer will offer any such insurance products in the future. Only time will tell, but it will probably cost millions of rands and thousands of court hours. The ICA suggested that insurers negotiate responsibly with their clients. Its view is that legal claims can be settled with a one-off payment of 50% and the remainder monthly. Having FSCA and ICA on the case seems to be bearing fruit. An important test case will be heard in the Cape Town High Court in September. I sincerely hope that campsites and businesses that provide products and services to the camping industry will benefit from the enormous work the ICA does. It has also made strongly worded representations to the National Minister of Finance, Tito Mboweni. It leaves a bitter taste when insurers delay in settling claims. Claims ‘evaporate’ when a business is liquidated, because insurance related to business interruptions does not cover the customer if their doors close due to bankruptcy. So they don’t pay, but rather contest the claims until there is absolutely nothing left of the insured businesses. Not cool, guys!