By Matthew Gezane
A few short weeks ago, a taxi strike brought the city of Cape Town almost to a complete standstill. Commuters were unable to get to work, meaning that several businesses were short-staffed or had to close entirely. Deliveries were unable to take place and after a few days, grocery store shelves started to look very sparse. And with the risk of violence looming on the horizon, many learners were unable to go to school, kept home by concerned parents.
As the smoke from all the burning rubble begins to settle, affected business owners will start the dreaded task of counting the costs from the aftermath. But the reality is, this is unlikely to be the last strike South Africa will see.
For business owners who find themselves dealing with the financial fall-out of a strike, riot or protest, what should they take into account?
Firstly, there are various ways that a strike can directly impact the balance sheet of a business.
Most commuters in the city are heavily reliant on the taxi industry to get to their place of employment. Business operations across various sectors are labour-intensive, requiring the physical efforts of a workforce to run operations. If, and when, an employee in one of these sectors is unable to get to work, the business stands to lose a portion - or even all - of its daily, weekly or projected monthly income, including other revenue streams.
Factors such as the looting, destruction of property, burning of busses and other transporting assets mean a business owner will have to refinance lost or damaged assets - typically at higher interest cost - as replacements.
For business owners, the most important thing you can do to protect yourself financially and mitigate some of the financial fall-out is to have business insurance.
The South African Special Risks Insurance Association (SASRIA) is a state-owned insurance company that provides coverage for certain risks that are typically excluded from a standard insurance policy. Specifically, SASRIA offers coverage for damages and losses resulting from politically-motivated events, civil unrest, riots, strikes, terrorism, and related perils.
How do you claim in an event of a strike?
Business insurance policies at an additional charge will have a degree of SASRIA protection embedded into the product at a certain percentage of the overall policy premium. Additionally, A well-structured business policy will have business interruption cover, which is designed to safeguard a drop in business revenue and or recover financial losses that occur due to unexpected disruptions to business operations.
In the event of a loss that falls within SASRIA’s jurisdiction (and outside of a standard insurance policy’s coverage parameters), a prudent insurer will proactively engage with SASRIA by requesting a claims mandate, which includes a claims payment limit. Important to note, these mandates and limits vary considerable between insurers and SASRIA.
The mandate allows the insurer to begin paying out claims that are legitimate and directly linked to the perils covered by SASRIA.
Things become more complex when it comes to the technicality that requires the insured to prove that their drop in revenue was caused by striking and rioting, as policies have various cover options that are triggered by certain chains of events or types of claim/perils.
This is where the expertise and guidance of a specialist insurance broker becomes critical for business owners. A broker will help navigate the complexities and technicalities around the policy wording - all the way to the final stages of getting signatures for claims payouts.
Thus, for business owners, it is not only important to make sure that you protect your livelihood against financial loss, but that you also have access to the right experts who will handle all of the complexities and help you make informed decisions, should the worst come to pass.
** The views expressed do not necessarily reflect the views of Independent Media or IOL.
Matthew Gezane is the Franchise Development Manager at Consult by Momentum