South African insurer to pay relief to clients hit by lockdown

South Africa’s Hollard Insurance Co Ltd. said it will provide relief to small and medium businesses hit financially by a lockdown to curb the spread of the coronavirus.

The announcement comes after the Financial Sector Conduct Authority on Friday said insurers agreed to consider paying relief to customers, pending the outcome of several court cases to determine whether insurers should pay clients who were forced to close due to the lockdown.

The relief will come in the form of once-off payments to enable businesses to keep running, the authority said.

With legal processes likely to take some time, Hollard has decided to pay clients covered for contagious diseases under the terms of their business-interruption policies, according to a statement Saturday.

“We remain of the view that nationwide government closures or lockdowns are not insurable risks and we believe that legal certainty regarding lockdown-related claims is urgently required,” said Willie Lategan, chief executive officer of Hollard’s property and casualty insurance unit.

“We’re concerned that many smaller businesses will be unable to survive until legal certainty is established.”

South Africa’s government allowed only essential services to operate under a lockdown imposed late March.

While rules have since been relaxed, insurers have rejected business-interruption claims, saying payouts can only result from physical events such as an infection at a company’s premises.

Read: A big court win for small business owner against SARS

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