Tourism and hospitality industry braces for fresh battle: Insurance payouts

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Businesses that have Business Interruption (BI) cover are saying insurers are not coming to the party with regard to their contractual obligations as laid out in these policies.

Tourism and hospitality providers again face economic hardship with a slump in demand brought on by extended lockdown Level 3 restrictions. Revised restrictions have resulted in reduced opportunities for hotel and tourism providers to operate.

Many businesses with BI cover have battled for months to force insurers to honour their contractual agreements.

Blame lockdown, not COVID, insurers say

Insurance giant Santam, along with other insurers, argued that the government-imposed lockdown, and not COVID-19, caused the losses incurred by many businesses in the beleaguered tourism and hospitality sector.

INSURERS OFFER THREE MONTHS’ PAYOUT

Santam offered its BI policyholders a full and final settlement amounting to the value of three months’ lost income in 2020. Claimants were unimpressed with the offer since the indemnity periods covered by most BI policies ranges from six to 18 months.

“Santam has said it will offer its tourism and hospitality customers a full and final settlement of only three months of losses, despite many policyholders having indemnity periods of six, 12 and 18 months in their contracts with the insurer,” Ryan Woolley of Insurance Claims Africa (ICA) was quoted as saying on TravelNews.

The offer of three months’ full and final settlement was deemed unacceptable for policyholders who had taken out BI cover for six to 18 months, resulting in a protracted legal battle.

LEGAL BATTLE FORCES INSURERS TO MEET OBLIGATIONS Restaurants are also facing continued losses. Image: Adobe Stock

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