consumerwatch: A leaked document has revealed the Financial Sector Conduct Authority (FSCA) and the Prudential Authority had reached an agreement with major non-life insurers over the business interruption claims saga. GeorginaCrouth
Cape Town - On the eve of payday, a leaked document dated July 27 revealed the Financial Sector Conduct Authority and the Prudential Authority had reached agreement with major non-life insurers over the business interruption claims saga.
On Saturday, the FSCA and Prudential Authority issued the release, saying insurers most affected by the saga had agreed on providing interim relief to their policyholders who have the appropriate contagious disease extension, while legal certainty is sought through the courts.The authorities said this relief, which follows bitter engagements between clients, brokers, lawyers and insurers, will take the form of once-off payments to policyholders, to enable them to continue operating.
The FSCA said it believes these claims should be honoured, “where they meet the terms of the contract lockdown should not be used as a ground to repudiate these claims”.The relief offered will vary on a case-by-case basis, depending on the insurer, and focused on those businesses most affected by lockdown, such as the hospitality sector and small businesses.
The relief can also be either on an interim basis, or as a full and final settlement, in which case the implications must be clearly communicated, in writing.In the statement, the authorities said they view the agreement as a “necessary and appropriate interim response to the current situation, particularly when one considers that the said non-life insurers are providing financial relief to their policyholders without the support of their reinsurers at this stage”.
Makgompi Raphasha, head of insurers and retirement fund benefit administrators at the FSCA, said the authority has been consistent in its messaging: “Although we didn’t view the lockdown as a trigger, it was never our intention to create a situation where there was a pre- and post-scenario: some insurers interpreted our communication 34 to mean if they had received a claim before March 27 , that claim is automatically invalid.
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