Premium Bridging Solution by Momentum Short Term Insurance during COVID-19

09 April 2020

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MSTI Namibia understands the difficulty many of our commercial clients are

experiencing due to the Covid-19 pandemic and we will support our clients

wherever possible.

 Over the past few years, Namibia has experienced various “disasters” that

negatively impacted specific sectors, some more than others. First it was the

construction industry in 2018, then the drought throughout 2018 & 2019 and

now Covid-19 in 2020.

 When the construction industry almost collapsed, we helped issue

“Performance Guarantees” without collateral to help our contractors with cash

flow. During the severe drought, we paid the December premiums back to all our

farming clients. Covid-19 will be no different, as we will look at where we can

help to adhere to our client-centric approach of “what matters to you, matters to

us.”

 After discussions with a leading bank, we have put in place a “Premium Bridging

Solution” for a bridged period (of say 6 to 12 months) to help our commercial

clients that are experiencing cash flow issues due to the current circumstances.

This solution will be provided after brokers, in conjunction with our

underwriters, have analysed the risk and assisted clients to adjust their cover, so

that there is sufficient protection in place for catastrophic events that could

threaten the business's survival.

However, if we listen to the economists, it can take much longer for economic

activities to normalize again and depending on the industry in which the

company is operating in, it may take months, even years to recover. If we all are

not going to help medium and small size businesses now, many will

unfortunately close their doors.

 In our discussions with reinsurers and other stakeholders, it is obvious that the

solution is not necessarily to give “carte-blanche” postponement of premium

payments or premium holidays, as it will unfortunately negatively affect other

policyholders. We need to keep in mind that the risk-spreading mechanism

(reinsurance and retro sessions among reinsurers) is complex.

We are negotiating with all stakeholders (reinsurers included) to see how we can

help, but as reinsurers do rightly ask, “who should be helped and who not?” as we

cannot allow the rest of the policy holders to be negatively influenced in these

unpredictable times.

 What did evolve from these discussions is that brokers as risk advisors can make

the biggest impact. Depending on the business and classes of insurance,

insurance risks may decrease and cover and premiums can be adjusted

accordingly, at difficult economic times like what we are experiencing now.

We are in the process of assessing the impact on our business and the affect this

pandemic is going to have, as well as the material impact on insurers.

Although the tourism industry is especially hard hit, there are also other

businesses that reviewed their portfolios and adjusted their covers to reduce

insurance cost. As expected, most of the instructions are coming from Lodges /

Hotels, Restaurants, Tour guides, Hiring companies, Transport companies, Fleet

owners and distributers related to the tourism sector amongst others.

However, we are open to help where we can, but unfortunately not all clients will

qualify and the following will be important considerations:

  • The business prior to Covid-19
  • Claims history
  • Affected Industries etc.
  • Ability to repay later

So please engage with us should your client need assistance.

Johan Barnard

CEO Momentum Short Term Insurance