South African financial services group Old Mutual has announced to its shareholders that it will proceed in the finalisation of all outstanding valid claims for business interruption for affected customers.
Old Mutual offers a broad spectrum of financial solutions to retail and corporate customers across market segments in 14 countries.
Whether or not customers with business interruption extensions for infectious and contagious diseases are entitled to cover for the COVID-19 pandemic and the related government enforced national lockdown has been the subject matter of several court cases.
South African insurer Santam has also announced that it has started the process of assessing and processing claims for all commercial policies with contingent business interruption extensions in addition to those covered by its Hospitality & Leisure division.
Old Mutual anticipates that the net business interruption and business rescue reserves reported for the year ended December 2020 will increase by between R85 million (USD 5.6mn) to R140 million (USD 9.3mn) compared to the amount reported for six months ended 30 June 2020.
The net business interruption and business rescue claims (including reserves) of R464 million (USD 30.7mn) reported for the first half of the year included an amount to settle business interruption claims of SMME customers with an annual sum insured of R5 million (USD 300,000) or below to enable them to continue operating in a tough economic environment.
This settlement was applied to all of Old Mutual’s qualifying SMME customers who had the infectious disease extension at the time of loss.