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Business interruption claims: Contractual challenges do not supersede the inherent right to dignity


Elise Burns-Hoffman is an independent insurance claims consultant who also lectures in a claims management course run under the auspices of [email protected] at UCT and in a health professionals postgraduate programme at the Health Sciences Faculty.

A failure to recognise the impact of common humanity in dealing with clients who make business interruption insurance claims is causing unnecessary and profound distress – something that the industry can quickly and easily put right.

Over the course of the past year, there has been a great deal said and written about the lack of payment by certain insurers of business interruption claims. There has also been much comment on litigation centred on the legal interpretation of applicable policy wording and the way communication with insured parties has been managed.  

A recent article in Daily Maverick alluded to the complexities and challenges for insurers with regard to their reinsurance arrangements – that is, the financial spreading of risk. 

Although not something about which the average consumer is likely to be aware, the reinsurance structures set up behind the scenes play an important role in decision-making on complex claims in all insurance industries – short-term insurance, life insurance and medical scheme insurance. 

In addition to the pressure created by the constraints attached to certain reinsurance agreements, there can be little doubt that the validity (or not) of business interruption claims, as based on the particular policy wording, has caused distress to the insurance companies involved. 

The CEO of the South African Insurance Association, Viviene Pearson, is quoted as saying that individuals in the industry faced great difficulty: “People don’t know what my colleagues in the industry went through in 2020. They are ordinary people with heart and compassion, who want to do the right thing. But they had to follow the process; they had to get legal certainty – for now and in the future. It was an impossible situation.”

As a long-standing industry professional, I beg to differ on the point of the “impossibility” of the situation in at least one respect. It was entirely possible for basic business manners – respect for and recognition of the dignity of the lives affected – to have been demonstrated and applied.

It was also entirely possible for insurers to have explained their internal difficulties to their clientele without divulging the intricacies of their reinsurance treaties. In fact, it was their duty to do so; if not for the benefit of upholding and protecting their reputation, then – at the very least – in the interests of recognising the basic human right to dignity, alongside that of the physical and psychological integrity of the insured.   

There is no other stage in the life of an insurance contract at which it is more important to engage honestly, personally, with empathy and understanding, than at claims stage. Even in the event of tough and drawn-out matters, simply listening to the story of the insured is important. Feeling heard and acknowledged holds tremendous power, irrespective of what transpires at the end of the claims assessment process.

Inversely, being left feeling disregarded and dismissed has an equally powerful impact, only for the worse.

How people are made to feel is not an issue of contractual specifics; it is an issue of communication methods, civility and integrity.

The claims stage is absolutely not the time to hold back on open communication and is, in fact, the only real time an insurer has the opportunity to demonstrate its worth across the board. 

While not all claims decisions can go in favour of the client and a decision to repudiate will inevitably cause unhappiness, there is a far greater possibility of reaching a point of mutual understanding when the dialogue, reasoning and explanation around decision-making is shared, as opposed to being “hidden” behind a smokescreen of some kind.

It would have done a great deal to soften the blow if the “heart and compassion” referred to by Pearson had been visible. Sadly, it seems to have been conspicuous by its absence.

Without negating that those working within the insurance industry have taken significant emotional strain, it ought not to be forgotten that it is their professional responsibility to conduct themselves in a manner that recognises and protects the human rights of each individual person with whom they interact. Similar perhaps, to how a health professional is trained and expected to showcase a considered, thoughtful and kind bedside manner, regardless of the diagnosis, treatment and prognosis given to those in their care.

No matter what ultimately transpires in the longer term of the current business interruption claims scenario, whether payments are made partially or in full, the memories of how those insured under the relevant policies were treated will far outlive any monetary compensation. 

In the words of Nelson Mandela: “Any man or institution that tries to rob me of my dignity will lose.” 

When business finds itself devoid of human-ness, is perceived to be blind to suffering and engages in behaviour that is experienced as stripping others of their sense of dignity, the loss is profound. DM


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  • Brilliant article. Whilst Santam, in my case, have decided to spend money on lawyers and advertising rather than honor the insurance policy they sold me, I have gone into debt to refund my customers despite me still carrying the costs of the operation.
    What a missed opportunity by Santam and the Industry as a whole to justify their existence instead of their pathetic ‘we were caught unawares just like you’.
    Eight months after submitting the claim and documents they ask for, now they issue fancy press releases about paying, meantime they want a mountain of more info and are disallowing loss of foreign-guest income from the claim. What a ‘Good and Proper’ letdown.

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