South African insurers are bowing to demands for the payment of losses that businesses suffered during the nation’s lockdown.

Momentum Metropolitan Holdings Ltd.’s Guardrisk will make settlement payments to policyholders who submitted business-interruption claims for losses suffered when all but essential services were allowed to operate. Santam Ltd. and closely held Hollard Insurance Co. Ltd. said they would offer one-time financial relief to clients hard hit by a five-week lockdown that started on March 27.

The payouts come after the Financial Sector Conduct Authority earlier this month ordered insurers not to broadly reject claims and sided with a Cape Town court’s interpretation of what qualifies as a business-interruption claim.

The FSCA and the Prudential Authority, which oversees the strength of the financial-services industry, last week struck a deal with insurers to consider once-off payments to help keep customers afloat, while courts decide whether insurers are correctly interpreting the terms of contracts.

South African insurers have generally rejected claims related to business closures as a result of the lockdown. They argue a global pandemic is not an insurable event and payouts are only triggered by physical events such as a fire.

“We hope the legal process is pursued and fast-tracked,” said Ryan Woolley, chief executive officer of Insurance Claims Africa, which is representing over 600 businesses in the tourism and hospitality sectors. “We are going to be pushing to get some resolution.”

Guardrisk is offering a settlement amount covering the first three months of the lockdown, Managing Executive Richard Eales said in an emailed statement. While there is no limit on claims, payouts will take into account savings the businesses made during the lockdown and other relief payments they received, he said.

Santam, South Africa’s largest property and casualty insurer, and Hollard will extend relief to mainly small-and medium-sized businesses, with Santam committing to a collective 1 billion rand ($60 million) in payments.

Guardrisk will proceed with a decision to appeal a ruling in a Cape Town court made against it so that the company can obtain clarity for the industry, Eales said.

“Policyholders will, of course, have the option of accepting the commercial settlement offer or waiting for the appeal court ruling,” he said.

Photograph: People wearing protective face masks wait for a bus Johannesburg, South Africa. Photo credit: Waldo Swiegers/Bloomberg.