THE first Covid-19 lockdown has resulted in insurance company Santam Namibia having to pay up to N$30 million in urgent relief funding to its clients.
These claimants who had taken out business interruption cover are mainly in the hospitality, leisure and non-essential retail services sector.
Company representative Franco Feris announced on Friday that the urgent relief is in response to the financial distress policyholders face.
Feris explained that Santam decided to pay out 70% of one months’ value of the sum insured, being the period where most businesses were impacted by the restrictive trading environment imposed by the stage 1 lockdown in the country.
“The 70% is based on a view that the businesses would have experienced variable expense savings during the lockdown,” he said.
The relief payments will be set at a minimum of N$25 000 and a maximum of N$1,5 million for individual policyholders.
Businesses take up such insurance to be reimbursed on lost revenue and extra expenses resulting from an interruption of business at the premises of a customer or supplier. This helps soften the financial impact of events that businesses are unable to control.
“The aim of the relief payment is to support policyholders who are in financial distress and does not serve as indemnity under a policy contract,” he stated.
The relief payment is mainly aimed at small and medium-sized commercial policyholders and large corporate entities.
According to the Namibia Financial Institutions Supervisory Authority (Namfisa) 2019 fourth-quarter report, the short-term insurance industry’s total assets decreased by 2,2% quarter-on-quarter and increased by 4,4% year on year to N$6,8 billion.
The decrease emanated mainly from a decline in re-insurers’ share of unearned premiums, said Namfisa.
The industry’s total liabilities decreased by 2,2% for the quarter and increased by 7,1% for the 2019 year to N$4,7 billion – this rise was mainly due to increases in gross provisioning for unearned premiums at the end of the quarter.
The value of the industry’s investment income increase was at N$77,5 million, mostly a cash-in from the money market.
There were only 35 278 risks underwritten by December last year, according to Namfisa, explaining that the low number of 12% less than last year was due to slow business uptake of insurance policies.
The non-payment of premiums on the due date or even after the grace period increased by 77,5% to 5 208 risks at the end of the fourth quarter of 2019.
Most of the ceased benefits were for personal motor vehicle and personal property during the period under review with 1 883 and 2 641 policy lapses, respectively.
However, the number of policies terminated drastically decreased by 84,7% to 29 234 during the period under review.
The country also spent N$95,1 million abroad in Lloyd’s and non-Lloyd’s industry’s premium for the fourth quarter of 2019.
Email: erastus@namibian.com.na
