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General view of Santam Insurance head office on June 24, 2020 Photo: Gallo Images / Jacques Stander
- In a 42-page judgment rendered in the Western Cape Superior Court on Tuesday afternoon, the court found that Santam was responsible for paying business interruption losses related to the Covid-19 shutdown.
- It also ordered the insurer to pay the impact during the 18-month policy period and that it had to pay the applicant’s legal costs.
- He cited similar Covid-19-related cases from around the world, including the UK and the US.
The High Court ruled in favor of Ma-Afrika Hotels and Stellenbosch Kitchens against insurance giant Santam, in a case involving business interruption insurance during the Covid-19 shutdown.
The two companies had joined Insurance Claims Africa (ICA) in litigation against Santam earlier this year. ICA is a public loss adjustment company that has represented more than 750 hospitality and tourism companies in an attempt to get insurers to pay business interruption claims.
In a 42-page judgment rendered in the Western Cape Superior Court on Tuesday afternoon, the court found that Santam was responsible for paying business interruption losses related to the Covid-19 shutdown. It also ordered the insurer to pay Ma-Afrika for the impact during the 18-month policy period and that it should pay Ma-Afrika’s legal costs.
He cited similar Covid-19-related cases from around the world, including the UK and the US.
At the center of the case is Santam’s argument that Covid-19 is not a notifiable disease. It rejected the blocking claims from Stellenbosch Kitchen and Ma-Afrika because regardless of whether there were Covid-19 cases within the radius the insurer covers, the companies would have been forced to suspend trading, the insurer said in its court documents.
The ruling noted that Santam had argued that the policies “insured the loss, subject to their terms, not the financial difficulties as a result of the Covid-19 pandemic.”
But when the case was heard in September, Ma-Afrika’s lawyers accused Santam of hiding behind semantics.
Ma-Afrika President and CEO André Pieterse said he hoped the result would bring some certainty. He also thanked the insurer for providing relief payments in the meantime.
“This result will go a long way in enabling us and others in the tourism and hospitality sector to weather the ongoing Covid-19 storm.
“We are also grateful to Santam for the interim relief payments received in August 2020, which enabled us to retain our entire staff of 210 loyalists with more than 1,000 direct dependents. We are hopeful that this court decision will end the litigation, thus ending the insecurity and suffering of many. “
In a joint statement with Ma-Afrika, the insurance body ICA welcomed the ruling, calling it a “resounding victory” for tourism and hospitality companies.
In September, Santam said he had set aside R 1.3 billion in the six months to the end of June for business interruption claims as his “best estimate”, including the R 1 billion he was paying as relief. However, he added that if the court ruled against him in the Ma-Afrika / Stellenbosch Kitchen case, he was not sure what he might have to release.
“The rand 1 billion payment has been extremely positively received by the affected customers, especially since we did it quickly without any administrative hassles,” CEO Lize Lambrecht said at the time.
In a similar case, a July ruling involved Café Chameleon and the insurer Guardrisk, where the court found the insurer to be responsible for the restaurant’s losses since the start of the pandemic. That case is due to go to the Supreme Court of Appeals this month.
