A South African court on Tuesday ruled that insurer Santam should pay coronavirus-related claims made by hotel group Ma-Afrika, which it had rejected, according to a written judgement.
Globally, firms like Ma-Afrika, forced to close under coronavirus restrictions, have been fighting the rejection of claims made under business interruption policies. In South Africa, insurers say these policies did not apply to government lockdowns.
Tuesday’s judgement however, following a case brought by the small hotel group and a related restaurant, ordered Santam to pay out on the group’s claims made under an extension of its business interruption policy.
“The applicants have established that they have an existing contractual right to indemnity under the infectious diseases clause to the policies,” the judgement stated.
The judgement said the combined total of business interruption cover for loss of revenue under four policies held by Ma-Afrika’s hotels, and another policy held by the restaurant, stood at 122.43 million rand ($7.94 million).
A spokeswoman for Santam, the country’s largest non-life insurer that has previously indicated it will appeal any decision against it, said the insurer would comment on the news on Wednesday morning.
Other insurers, under pressure from regulators and with their reputations bruised by the dispute, have also been watching the case. It is seen as providing some legal certainty around their obligations in relation to the policies.
Ryan Woolley, CEO of Insurance Claims Africa, a loss adjuster representing over 750 affected firms in South Africa including Ma-Afrika, said the case provided the certainty required to finalise all such disputed claims.
“We believe it is now time for the sector to step up and display the ethical leadership that has been missing from their response to this crisis thus far,” he said in a statement.
Andre Pieterse, chairman and CEO of Ma-Afrika, said the decision would greatly assist his firm and others in his sector to weather the pandemic, and he hoped it bought an end to the litigation.
He also thanked Santam for a payment received under a 1 billion rand initiative the insurer offered to affected clients. The payments were interim relief intended to tide them over while legal battles played out.
South African insurer Discovery said on Monday its full-year profits could fall by up to 90%, hit by a 3.3-billion rand ($191-million) provision to cover the potential impact on claims and policy lapses due to the coronavirus.
It also said it would not pay an annual dividend, with the payouts to be considered when appropriate, sending its shares down 5.5% before recouping some losses.
The company said the hefty provision covered the potential impact on claims and anticipated policy lapses as stretched customers stop paying, while the outlook also covered the impact of long-term interest rates.
It warned its headline earnings per share – the main profit measure in South Africa – for the year to June 30 were expected to be between 70% and 90% lower than the 789 cents reported a year earlier, though it said the final outcome was subject to a high degree of volatility.
“Discovery is confident that the group is strong under high stress scenarios, with sufficient liquidity and solvency to weather uncertain conditions,” it said, adding capital ratios and cash buffers were expected to remain within or above target.
The provision, Discovery said, was intended so that all of the currently expected impact of the novel coronavirus as far ahead as 2022 was carried in this financial year.
Changes to interest rates in South Africa after the government lost its final investment-grade credit rating earlier this year, and historically low interest rates in the United Kingdom where it has a unit, were expected to have a further substantial impact on performance.
Discovery’s profits have been falling in recent years as it ploughed money back into new businesses including a hefty investment in launching a digital bank, which it said now has 177,000 clients and 2.1 billion rand in retail deposits.
So far, lapses in most of its businesses had been low, it said, while new business annualised premium income was up 4% for the 11 months to May 31.
Local insurance firm King Price has launched a new product that will cover local firms in the event of a cyberattack.
The product is known as cybersure and it includes cover for cyber liability and cybercrime, data breach expenses, damage to computer systems and data, associated loss of income, and more.
“Cyber attacks can be devastating from both a financial and reputational point of view, and it’s clear that cybercrime has become a major threat to South African businesses. Having cyber insurance is non-negotiable,” says King Price spokesperson Wynand van Vuuren.
At the moment the product is only available to businesses but King Price says it will be launching a personal cyber insurance product in 2018.
Cybersure customers will be covered for a variety of cyber attacks including ransomware. King Price says that in the event of a ransomware attack it will pay the ransomware if that is what is needed.
It seems like a rather solid product but we’d urge you to contact King Price or visit the website to get more information about cybersure to see if its right for you.
BY Brendyn Lotz for HTXT
Using your phone for social media while driving could be considered reckless behaviour by an insurer, giving the insurer the right to decline a claim in the event of an accident, said a legal expert. The first thing you would need to do is to call a lawyer.
Maria Philippides, director of insurance litigation at Norton Rose Fulbright South Africa, explained the legal implications as well as consequences for insurance cover where reckless behaviour is related to the use of social media.
She referred to a recent report in the UK where a woman was jailed for using Facebook when she caused a car accident. Philippides explained to Fin24 how a case like this could possibly be handled locally.
In South Africa, the use of a cell-phone while driving is prohibited by the road traffic regulation. This is not just limited to talking on one’s phone, but also holding a phone or other communicating devices when driving, explained Philippides.
If caught by authorities when doing these activities, one could be liable to pay a fine. In the instance that this behaviour leads to something worse like an accident causing death, one can be charged for culpable homicide, she said. “If convicted, it would carry a jail sentence.”
Insurance policies are designed to cover the insured for their negligent behaviour. But there are policy provisions which explain when insurers do not pay out claims. This is either when the claims arise from a criminal offence, such as using your phone when driving, explained Philippides.
The other instance when a claim is not paid out is if the policyholder does not act with “due care” to avoid an accident or loss or damage, she added. In this case the actions go beyond negligence and are viewed as being reckless, she explained.
A court would test for recklessness in terms of the person being aware of the risk that would result of their conduct, and still continuing with the action regardless. In that case the insurer will be able to reject the claim, she said. Hence contacting an attorney in an injury case should be the first move anyone should make to ensure they get their insurance claim without any form of issues.
“If you are operating your cell-phone, which you know is illegal or an offence … and your attention is not on the traffic and the road ahead of you, [with your head] looking down. That can be termed as reckless.”
Drivers have an imposed duty by the national road traffic act to be engaged with driving, explained Philippides. If you are engaged in an activity “so removed from your duty to drive properly”, no matter what it is, including applying make-up in traffic, it is reckless, she emphasised.
When asked about how operating wearable devices, such as smart-watches, while driving may be viewed by insurers, Philippides acknowledged that the law was struggling to keep up with the pace of changing technology.
“Law can’t keep up with every single device that gets created… There is no specific prohibition on a person using a smart-watch,” she said.
However even though there is no prohibition in law for using a device, insurers can reject a claim if the use of the device can be classified as reckless, she explained.
Philippides pointed out the innovation of smart windscreens, where a navigation panel comes up on the windscreen when driving. Even if this innovation is legal, it is possible that insurers may view the use of this navigation while driving as reckless.
Proving use of social media
If a policyholder does not accept that their claim was declined, the matter can reach the courts. It is up to the insurer to make the allegation and prove that the policyholder was using their device when driving. Philippides explained that the insurer would have to get evidence of the use of the device. This could be witness statements, the police report and possibly cell-phone records to prove the use of the device coincided with the time the accident was made.
The records could show when data was used, or when phone calls were made. Activity logs from social media, with permission from the policyholder in the case that he or she has privacy settings, can also be used to prove use of a device, she added.
Failure to submit this information can lead to an adverse inference by the courts, indicating that the insured possibly has something to hide.
Something as simple as liking a page at a time that coincides with the timeframe of an accident could implicate the policyholder, said Philippides. “It shows attention was diverted from driving.”
“The ordinary person on the street does not realize that what they are doing while operating on social media is accessible to anyone. If it is publicly available, anyone can use it, the right to privacy is basically waived.”
By Lameez Omarjee for Fin24