Thursday | 02 April | 2020
By Nico Strydom
As in many other sectors, the Covid-19 pandemic will probably result in big changes in the insurance scene.
According to experts at the law firm Webber Wentzel the Covid-19 pandemic will initially show a sharp rise in insurance claims, after which insurers will probably introduce new or amended exclusion clauses that were previously not felt as essential.
Life and health insurance
Policies for life insurance, income protection and disability paid when the policy holder dies or becomes disabled may, according to Webber Wentzel, in this case provide protection if all the other conditions are met and there are no exclusions or restrictions.
“A restriction that could possibly apply in this case, is risky behaviour. Should the policy holder for instance not keep to the government’s travel recommendations to avoid infection, the insurer may regard it as high-risk behaviour and possibly not pay out the policy.”
Webber Wentzel’s experts say some of these types of policies generally exclude existing health conditions such as HIV. The policy holder must therefore check which diseases are excluded. Other policies could specifically exclude certain disease pandemics.
Medical malpractice insurance
This insurance covers any action, mistake or negligence by a doctor, specialist or health institution in the context of the provision of a health service to patients that could lead to claims for damage.
According to Webber Wentzel the standard of reasonableness apply. During a pandemic the circumstances are determined by international best practices. In the case of the Covid-19 pandemic class actions may be brought by groups of patients exposed to damage because of insufficient measures to control infection.
Webber Wentzel’s experts are of the opinion that policies for business interruption may not cover the damage suffered as a result of Covid-1.
“Certain policies require that there should be underlying material damage to insured property and the spread of Covid-19 will probably not result in physical damage to insured property.”
Some policies for business interruption do, however, have extension clauses regarding contagious diseases.
These policies cover the liability of an individual to pay a third party damages as a result of negligent behaviour. In the Covid-19 situation businesses could possibly be sued for negligence by allowing the virus to spread further.
According to Webber Wentzel it would be difficult to prove negligence regarding the spreading of a disease. “It could perhaps be easier to prove negligence by the government, for instance the absence of proper infection control in public buildings or government institutions, than against individual businesses.”
Director’s and officers’ liability
This policy covers wrongful actions by directors and officers of a company that could result in the company or third parties such as shareholders and creditors suffering damage. This could lead to a claim against directors and officers in their private capacity to compensate for the loss.
According to Webber Wentzel the Covid-19 pandemic could result in a similar scenario as in the case of cyber attacks on companies.
“This can lead to claims against directors and officers to protect the undertaking. If applicable policy and procedures are not implemented, directors and officers can run the risk of being liable.”
Liability for employment practices
Insurance for employment practices offer employees additional compensation under the Compensation for Occupational Injuries and Diseases Act. According to Webber Wentzel this could happen if, for example, employees are infected by Covid-19 in the execution of their work.
“It is for this reason that many businesses instructed their employees to work from home because they could not guarantee protection in the workplace. Their must be a balance between keeping employees safe and to continue earning an income.”
Travel and credit insurance
Webber Wentzel says in the context of Covid-19 travel insurance could possibly be paid out for claims such as the cancellation of flights or itineraries, repatriation and medical expenses.
“Credit insurance will cover a company against the non-payment of accounts by debtors who become insolvent. Their insolvency may be cause by supply interruptions or because the business had to close its doors because of the Covid-19 pandemic.”
Webber Wentzel: https://www.webberwentzel.com/Pages/default.aspx
* All information was correct at the time of publication.