South Africa's Financial Provisioning Regulations' transitional period extended to 2021
Insurance & Reinsurance
On 12 August 2021 the Financial Sector Conduct Authority (“the FSCA”) issued a Press Release entitled “Update on Contingent Business Interruption claims” (“the Press Release’) in terms of which the FSCA provides an update on the processing of contingent business interruption claims (“CBI claims”).
The FSCA confirms that there has been a significant decrease in complaints received regarding CBI claims since December 2020 and that it is evident that insurers have endeavored to process CBI claims efficiently.
To this end, the FSCA notes the following developments in respect of CBI claims:
The FSCA is still receiving complaints, albeit at a reduced volume, and is in the process of investigating these complaints;
Insurers have made settlement offers in respect of certain CBI claims, some of which have been accepted by policyholders;
Some policyholders are abandoning CBI claims as interim payments were adequate to cover losses incurred;
Certain CBI claims are the subject of litigation due to disputes on the quantum; and
Insurers have provided interim relief payments to policyholders in instances where the maximum indemnity period is longer than 12 months.
Importantly, the FSCA also explains certain registered CBI claims are pending due to insurers awaiting outstanding information and documents required from policyholders in order to assess the CBI claim. The FSCA requests policyholders to proactively collate the necessary information and documentation in respect of their CBI claim.
In this regard the FSCA has provided the following guidance, subject to an insurer’s specific requirements, on what may be requested by insurers in order to process CBI claims:
Annual financial statements for the last three financial years;
Confirmation from an auditor or accountant that the amounts furnished by a policyholder are a true reflection of the books of account;
Proof of COVID-19 at the premises or within the radius (depending on the policy wording) and confirmation of the date on which COVID-19 was at the premises/within the radius;
Proof of original bookings, cancellations of accommodation and refunds of deposits to guests where the CBI claim pertains to cancellations of bookings; and
Proof of any payment received by a policyholder from the Unemployment Insurance Fund (UIF) COVID-19 Temporary Employment Relief Scheme (TERS).
The FSCA encourages policyholders to engage with the claims department of the relevant insurers, appointed loss adjusters and brokers to navigate remaining issues on CBI claims.