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A Cape Town court ordered Santam to 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 UK Financial Conduct Authority’s approach to resolving business interruption claims as a result of Covid-19 restrictions and ordered Santam to pay Ma-Afrika Hotels and Stellenbosch Kitchen for the losses over an 18-month period, according to the trial Tuesday.
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 the claims, saying that a global pandemic is not an insurable event, some companies have offered relief to clients and others have signed settlement agreements.
Santam, South Africa’s largest short-term insurer, which has offered some 1 billion rand ($ 65 million) of business interruption relief to some clients, has said it will assess whether to pay a dividend after the case is resolved. Santam did not immediately respond to a request for comment.
Insurance Claims Africa, the specialized claims preparation company that worked with Ma-Afrika Hotels and Stellenbosch Kitchen, asked other insurers that still block claims to pay customers.
“We all know this was a test case, not just for Santam but for all the insurers that refused to pay these claims,” said Ryan Woolley, ICA’s chief executive, in an emailed statement.
“By resolving valid claims expeditiously, they have the opportunity to contribute to the survival of companies in this critical sector and the preservation of thousands of jobs.”
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