Africa-Press – Namibia. THE damage done to Namibian businesses by the Covid-19 pandemic has been exacerbated by some insurance companies’ delays in settling business interruption insurance claims. While a number of Namibian insurers settled claims corresponding to principles set out in court judgements favourable to claimants in South Africa and the rest of the world, others opted not to accept the judgements as legally binding.
This has prompted cash-strapped and uncertain policyholders to sue their insurance companies.
In December 2020, the tourism group, Gondwana Collection Namibia, filed a case against Hollard Insurance Namibia in the Windhoek High Court to get a court order declaring that Hollard was liable to pay out its Covid-19 business interruption claim. With Hollard defending the case, the matter is still pending in court.
Linda de Jager (LDJ) talks to the chief executive officer of Hollard Insurance Namibia (Hollard), Jaco Lamprecht (JL).
LDJ: Hollard communicated to policyholders in June 2021 that the current ‘prominent test case’ in Namibian courts – to obtain legal certainty – will be the determining factor in the final settlement amounts. Subsequently, Hollard formally denied this in a communication to some policyholders. This means disputed settlement offers will also have to go the legal route. Please clarify these apparent inconsistencies.
JL: The ‘prominent test case’ to which you refer related to a unique, bespoke policy wording and could not have provided the clarification desired. This does not preclude a ‘test case’ from happening in the near future, with a number of cases relating to Covid-19 claims, involving four different Namibian insurers, heading to court. It is possible that one of these cases will meet the criteria of a ‘test case’, being broadly applicable across most circumstances and policy wordings.
Hollard has only three Covid-19 disputes outstanding, of which two are before the courts, which means litigation has been extremely limited. We continue to engage with policyholders whose settlements have not been finalised and are optimistic that we will settle these matters amicably, rather than through litigation.
LDJ: Some policyholders are of the opinion that larger claims are indefinitely disputed in court, thus attracting legal fees out of reach for policyholders, effectively forcing them to accept smaller settlement offers. What is your perspective on this?
JL: Hollard regards court action as undesirable for a number of reasons and we remain committed towards finding an amicable solution where possible. At the same time, we recognise that the courts are there to provide guidance and legal certainty in cases where disputes arise and where the parties are unable to resolve the dispute among themselves.
While we obviously cannot comment on matters currently before the courts, we need to emphasise that only two of 86 claims received have ended up being subject to court action, and that Hollard has not initiated any of these actions.
LDJ: Some policyholders maintain that Hollard is now the only insurer that [does not] accept the legitimacy of business interruption claims. Why?
JL: It is incorrect to say that Hollard has not accepted the legitimacy of business interruption claims. In fact, 97% of all Covid-19 business interruption claims submitted to Hollard have been finalised. To date, claim payments totalling N$107,6 million have been made, with a further N$ 4,3 million having been paid out in the form of relief payments to qualifying policyholders. Further financial assistance of N$10 million has been rolled out to our tourism policyholders. Hollard has paid, and will continue to pay, all valid Covid-19 business interruption claims.
LDJ:Why did most insurers withdraw cover for infectious and contagious diseases mid-term at a critical time?
JL: It is now common cause that the insurance industry was caught unawares by the first worldwide pandemic in 100 years. And the covers provided under the contagious and infectious diseases extension that existed on a small portion of mostly hospitality industry policies, were not contemplated to cover the extraneous effects of such a pandemic.
Subsequent actuarial analysis confirmed that the premiums required to cover businesses against the impact of worldwide pandemics would make business interruption cover unaffordable.
Understandably, global reinsurers withdrew such cover, even where they were available, for any new events, and even if a client now wants to take out such a policy, it would hardly be achievable.
Importantly, once a client has a valid claim, an amendment to the policy cannot affect such a valid claim. Amendments operate prospectively, not retrospectively.
LDJ:Will policyholders be able to get cover for future pandemics?
JL: Limited cover might be reintroduced in the near future, but it is likely to be subject to so-called sub-limits, restricting claims to manageable levels. Such cover, should it become available, will attract quite a steep premium. It will also be restrictive to ensure it remains affordable without creating extreme exposure for the insurance industry.
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