Insurers must pay – regulator
COVID CLAIMS: LEGAL CERTAINTY OBTAINED
Reviews to ensure decisions in line with recent court judgments.
The Financial Sector Conduct Authority (FSCA) has completed talks with nonlife insurers about contingent business interruption insurance to confirm legal certainty has been obtained and is now calling on insurers to pay out these claims without undue delay.
Various insurers refused claims for business interruption after the lockdown was introduced in March last year, until the high court ruled that there is cover for business interruption losses caused by Covid-19 itself, as well as generally by the lockdown and restrictions.
This is provided that Covid-19 infection happened within the designated radius of the insured premises.
This approach was confirmed by the Supreme Court of Appeal.
Insurers have since started to review claims to ensure decisions are in line with recent court judgments.
According to the FSCA, it received some complaints from policyholders regarding the burden of proof requirements for business interruption claims.
But several insurers indicated some policyholders had only sent claims notifications to them without the necessary supporting documents.
The FSCA, therefore, is urging policyholders to contact their insurers urgently with the necessary information.
“Insurers should provide detailed guidance to policyholders, as business interruption claims are of a technical nature. Insurers are also reminded to consider the guidance the FSCA issued in this regard and finalise these claims as expeditiously as possible.”
The FSCA stressed insurers must ensure policyholders do not face unreasonable post-sale barriers to submit business interruption claims.
To assist policyholders with the information that must be submitted for the claim assessment process, the FSCA advises insurers to develop a set of frequently asked questions for their websites that contain clear answers.
The FSCA said it requested insurers to apply the trends clause in line with the court judgment.
“This means that no insurer may, when it considers adjusting the loss that a policyholder has suffered as a consequence of Covid-19 and the government’s response to it, consider circumstances which are part of the composite insured peril.”
While one insurer is appealing the high court decision about the duration businesses can claim for, the FSCA has ascertained the dispute regarding the indemnity period does not apply to most insurers involved. Therefore, the FSCA does not believe the dispute will affect the majority of business interruption claims.
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African Rail Industry Association’s case is clear, compelling, says letter.
In his presentation of the economic reconstruction and recovery plan in October last year, President Cyril Ramaphosa said that rail lies at the heart of reviving South Africa’s economy.
Now, the African Rail Industry Association (Aria) is pushing for this to become a reality in an open letter to the president.
Aria chief executive Mesela Nhlapo writes: “Your introduction of third-party access to the country’s railway network is, in our view, the most significant policy development in years.”
She says rail is the backbone of the SA logistics and transport value chain. It will become even more critical in a post-Covid-19 environment, as it is cheaper, cleaner and more efficient than road transport and lends itself to carrying cargo in a sanitised, minimal-contact environment.
“The case for rail, we believe, is clear and compelling.
“Rail remains the most viable option for the transportation of grain, automotive components and fully built car units and minerals.
“It will reduce congestion on our roads and free them up to carry commuter traffic and sensitive cargo, like perishables and cold storage items.”
Nhlapo points out that rail infrastructure has been a neglected area of infrastructure investment for decades, lagging behind areas such as energy, while having to compete with other infrastructure sectors for investment.
She says the continent is looking to SA for leadership.
“At the African Union’s 24th ordinary session in Addis Ababa in 2015, South Africa was identified as a manufacturing hub for railway and rolling stock equipment.
“The formation and operationalisation of the African Continental Free Trade Agreement will require the support of a vibrant rail sector to be fully realised.
“It is time for us to lead.”
Aria calls on the president to revisit railway infrastructure.
The association represents a range of rail industry stakeholders, including original equipment manufacturers, rail component manufacturers, operators and services companies.
Nhlapo suggests formally creating a rail advisory committee to bring together the rail industry, government, development and private finance community, as well as labour and the skills development and training fraternity.
“The [committee] would support government’s efforts in areas to shape policy and legislation to guide the evolution of rail operations and safety standards.
“It would address legacy issues affecting the size and structure of the rail industry and obstacles to the growth of the industry.
“It would boost Transnet’s and the Passenger Rail Agency of South Africa’s ability to drive economic growth and transformation. It would assist in ensuring that freight’s third-party access to Transnet’s network, a key element of your economic reconstruction, becomes a reality.
“It is time to get all stakeholders around the table to get our rail industry driving our economy forward.”