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Santam finally agrees to assess business interruption claims

Wendy Knowler Consumer journalist
Santam will start assessing claims for clients who had been paying for hospitality and leisure policies, which include business interruption.
Santam will start assessing claims for clients who had been paying for hospitality and leisure policies, which include business interruption.
Image: Santam

Insurance giant Santam announced on Monday that it will start assessing claims for those of its clients who had been paying for hospitality and leisure policies, which include business interruption (BI).

The claims in question are those impacted by the recent judgment in the Western Cape High Court in the case between Santam and Ma-Afrika Hotels and The Stellenbosch Kitchen, and the judgment of the Supreme Court of Appeal (SCA) in the case between Café Chameleon and Guardrisk Limited, including claims previously rejected by Santam in the months after the national lockdown of late March 2020.

“The Ma-Afrika judgment resolved that there is cover for business interruption losses caused by Covid-19 itself and generally by the national lockdown and related restrictions imposed by government in response to the pandemic, provided that there was an occurrence of Covid-19 within the designated radius of the insured premises,” Santam said.

“The SCA decision in the Café Chameleon court case confirmed that approach,” Santam said on Monday.

Last month, Santam competitors Guardrisk and Hollard committed to paying their clients’ business interruption claims, in light of the SCA dismissal in favour of Café Chameleon on December 17.

But Santam refused to accept the outcome, arguing that the cases were materially different. This is despite its earlier position, where it wrote to the SCA asking to join its Ma-Afrika appeal with the Café Chameleon appeal.  

At the time, Ryan Woolley, CEO of specialist public loss adjuster Insurance Claims Africa, expressed dismay at what he termed Santam’s “Stalingrad approach”.

“Their repeated refrain, which is to seek legal certainty, is clearly hollow, when you consider that eight high court judges and five SCA judges have unambiguously found BI claims to be legitimate and ordered insurers to pay out claims,” Woolley said.

“As South Africa faces a second wave of the Covid-19 pandemic, hope of survival is fast evaporating for many of these businesses who were counting on the summer holidays to carry them through to 2021.”

Despite Monday's announcement that it will now reassess business interruption claims it previously rejected, Santam said it still believed that there were valid reasons to appeal the judgment of the Western Cape High Court in the Ma-Afrika case, with respect to the indemnity period.

“[We] will therefore continue with our application for leave to appeal the Ma-Afrika judgment at the SCA, specifically with regard to the indemnity period.”

Meanwhile, affected Santam policy holders must now provide Santam with audited financial statements and other documentation to support their claims.

“[We have] previously advised intermediaries of these requirements and will continue to do so over the next few weeks,” Santam said.

“Clients are urged to work closely with their intermediaries to ensure that the requirements for processing claims are met.”

Santam has already paid out more than R1bn in interim relief to nearly 2,500 small and medium-sized businesses in the hospitality, leisure and non-essential retail services industries that have CBI cover in the policies. Those payments will be offset against valid claims arising from the assessment process.

“Santam respects the decision of the courts and believes that the recent judgments are sufficient to provide legal certainty in terms of the proximate cause of business interruption losses for policies with the same conditions, characteristics and circumstances to the Ma-Afrika and Café Chameleon judgments,” the insurer said.


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