The Insurance Institute of Gauteng held a premium education event on Business Interruption. The session aimed at providing an insights into the Business Interruption cover from a special risk perspective as well as a global flair.
Justin Crick, from RGL Forensics in London said when a business interruption claim arise should be able to isolate the effect of the incidents from all other factors, internal and as well as external. He said if is a loss in profit, the insurers must be able to establish whether the loss was as the result of a business capacity, competition, economic environment or seasonability.
Crick advised that there is always a need to review expected position required in each loss, however where partial loss is suffered as small change in the expected position can have a significant impact on the overall loss.
Many companies have planned shutdown for planned maintenance, holidays and strikes and if a business loss occurs during this period, insurance is not liable to pay out a claim. “It is essential that maintenance plans are carefully considered.”
He indicated that underinsurance is one of the reasons that could lead to problems on both sides of the contract. The insured would receive full recovery and experience financial difficulties and as well as loss of future business.
According to Crick, some common causes of underinsurace is in the start up businesses where there is no historic sales to base the expected sale on and a need to save on premium.
He said an insurer has to manage insured’s expectations, consider each circumstance and raise the issue early during loss review and where possible, amend policy wording to clarify insurers position.
Letlhogonolo Tau, Customer Relations Manager at SASRIA said there are 200 strikes in South Africa every month and 20 strikes everyday. Tau said SASRIA has a strategic mandate to make South Africa a better place by providing insurance covers for riots, strikes, political violence, agriculture, construction and business interruption. He said in the period of 2014 – 2015 SASRIA has paid out a total of R61 million in claims and it provides a cover of up to R1,6 billion. SASRIA cover is available immediately and there’s no waiting period. “We ensure that our clients are covered and no matter what comes their way and we can issue a stand alone policy as well,” Tau said.