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Insurance company Santam says it plans to appeal a Superior Court ruling that found it responsible for paying a client’s claim related to the coronavirus lockdown.
The insurer said the judgments have been appealed and final judgments are expected in late 2020 or early 2021.
“Santam believes that the Western Cape Superior Court was wrong in its judgment regarding causation and insured peril, trend clause and indemnity period, and is therefore seeking clearance to appeal to a higher court,” said on Friday (November 20).
“Santam believes his catastrophic reinsurance will limit the net cost of contingent business interruption claims. However, the scope of reinsurance recoveries will ultimately depend on the reinsurers’ response to the outcome of the legal process ”.
The Western Cape Superior Court had organized Santam will pay business interruption claims to two South African hotel companies, which could open up the industry to cover losses suffered from the coronavirus pandemic.
The court agreed with the approach of the UK Financial Conduct Authority in settling claims of business interruption as a result of the Covid-19 restrictions and ordered Santam to pay Ma-Afrika Hotels and Stellenbosch Kitchen for the losses over a period of 18 months.
The decision comes as another South African insurer, Guardrisk, appeals a ruling against it in a similar matter, and can be used by other insurers in the country to finalize its treatment of virus-related business interruption claims.
While many local P&C insurers rejected claims, saying that a global pandemic is not an insurable event, some companies have offered relief to their clients and others have signed settlement agreements.
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