JOHANNESBURG - Law firm RMB Attorneys on Saturday said Santam faced a litany of urgent court applications for flouting the regulator’s warning and refusing to pay out valid Covid-19 business interruption (BI) claims.
It said a flood of final demands had been issued on Friday and Saturday against the insurance giant in respect of BI claims from insured business owners and respondents across South Africa that Santam refuses to pay
out, despite direction by the Financial Sector Conduct Authority (FSCA),
the insurance regulatory authority, to do so.
RMB Attorneys said it was representing 300 claimants on a contingency basis against insurers, including Santam, Old Mutual, Hollard, Bryte and Guardrisk.
The firm said it was in discussions with other institutions that represent another 200 claimants to combine their legal efforts against the insurers into a large class action suit.
It said all business owners that served Santam with final demands were prepared to take the insurer to court urgently, if the insurer did not assess and pay out claims the FSCA had deemed valid in the next seven days.
Santam has become the public face of the BI battle as hospitality and tourism clients have expressed outrage over its refusal to pay claims. They argue a notifiable disease, such as Covid-19, is the trigger for a claim, per their policy wordings.
Santam and most other insurers have dug in their heels, blaming lockdown for the losses, not the virus.
To date, only OUTsurance has paid out its BI claims, setting aside R220million to settle them.
Santam has cited its answering affidavit in the Ma-Afrika-Stellenbosch Kitchen matter, which is due to be heard in the Western Cape High Court on September 1, to insist that its policies were written to cover local events and blamed the lockdown for business losses.
It denied the Guardrisk v Cafe Chameleon ruling was precedent-setting.
“Not all policy wordings are the same, which influences precedence. Judge Le Grange noted in his judgment that each case must be ‘decided upon its facts and the law’ and his ruling does not open ‘the floodgates of liability’,” Andrew Coutts, Santam’s head of intermediated distribution, wrote earlier this month.
“It is our contention that a national lockdown would not be implemented for an outbreak within a specific area and that by application of the trends clause, irrespective of an incidence of disease around a specific premise, all revenue would be impacted. As a result, claims resulting from an interruption due to the national lockdown are not covered.”
Coutts said Santam had a strong claims-paying track record, and its capital “comfortably” exceeded the minimum regulated solvency requirements.
On Friday, the Prudential Authority issued a statement reiterating the FSCA’s stance that the Covid-19 pandemic and the claims arising from it pose little systematic risk to the local insurance industry, further bolstering the FSCA’s warning that the insurance industry must stop broadly rejecting claims from businesses related to the lockdown.
This comes in the wake of Guardrisk’s recent loss in the Western Cape High Court against a Cape Town restaurant whose claim was repudiated, based on the same principle that Santam was using not to honour its obligations to its clients.
RMB’s principal, Ryan Botisis, said the attitude and stance of the insurers was totally unsympathetic and unconscionable to the needs of its customers that have for years supported them unconditionally.
“Now that their clients need their cover, the insurers are doing everything in their power to renege on their obligations. Our mandated clients range from fast food franchises, luxury game lodges to big restaurant and hotel groups, all of whom have seen their insurer let them down diabolically in their time of need,” he said.