19 Mar Insurance Response to Covid-19
Although the Corona Virus has been well publicised since the beginning of the year, the real effects to the economy and business have only become apparent since Presidents Ramaphosa’s speech on Sunday evening declaring a National State of Disaster. South Africa has seen an unprecedented change in the way we live our daily lives. Personal hygiene, stockpiling, market volatility, social distancing, working from home, cancellation of all events and sports have become the new norm in our society. Life seems to have completely changed in a week and the shock waves are now being felt, especially for businesses.
Usually businesses turn to their insurance policies when sudden events occur. However insurance in this instance provides little or no assistance to deal with the Covid-19 business interruption risk. Business Interruption policies require that there is material damage for the policy to respond to a loss. In the case of the Corona Virus outbreak, there would be no physical damage to any assets and as a result, this cover would not respond to any losses. Certain insurers however, extend their policies to include infectious diseases but this cover is normally limited to outbreaks which actually happen within the confines of the insured property and cover is sub-limited to a nominal amount.
The business risks presented by Covid-19 are unique and the impact not fully understood as yet. In effect we are all at “war” with the Corona Virus a risk that is uninsurable in South Africa. Businesses are faced with the reality that implementing risk mitigation tools and controls is the only realistic way of dealing with the Covid-19 risk. Pleasingly, South Africa have taken pro-active steps to prevent the spread of the virus by closing its borders and ports of entry which will play a material effect in the reduction of business risk as evidenced in other countries. Although we are in for a bumpy ride and sail into an uncertain future, South Africa has always proven to be resilient during difficult times. By working together we all have what it takes to get through this turbulent time!