CAPE TOWN - SANTAM took a pounding on the JSE yesterday as shareholders weighed the Western Cape High Court’s finding that the insurer was liable to pay full business interruption losses to companies that suffered as a result of lockdown measures imposed by the government to contain the spread of Covid-19.
The insurer’s share price plunged 4.98 percent to R270 after the court ordered Santam to pay Ma-Afrika for the impact over the entire policy period of 18 months, without limitations. The court also ordered that Santam pay Ma-Afrika’s legal costs.
Santam said it had taken note of the Tuesday ruling, warning that the detailed and complex nature of the judgment, as well as its broader implications, meant that it needed to be carefully considered.
The group said that it would also be important for it to discuss the implications of the judgment with all its stakeholders, including reinsurers, in order to arrive at a comprehensive response.
It said that the losses were global in nature and were also subject to appeal court proceedings in various countries.
“The response of the global reinsurers, which were in effect insurers to the insurer, is important in helping us to reach finality on this matter,” Santam said.
“We do understand that all parties need finality as a matter of urgency and therefore remain committed to doing our utmost to ensure that we achieve that as quickly as possible.”
Santam had refused to compensate businesses – the bulk of which are in the restaurant and hospitality industries – which had insured against a notifiable disease under their business interruption cover, from the disastrous effects of the Covid-19 pandemic.
The tourism and hospitality sector took the brunt of Covid-19 restrictions, sustaining more than 740 000 direct and 1.5 million indirect jobs, and contributes 8.6 percent to the South African economy. It was also the lifeblood for many micro and small enterprises creating employment opportunities for men, women and youth across the country.
Specialist claims preparing company Insurance Claims Africa (ICA) decided to join forces with hospitality group Ma-Afrika Hotels in its litigation against their insurer, Santam, which had refused to settle their valid Business Interruption claims, even though they included cover for infectious or notifiable diseases.
ICA chief executive Ryan Woolley said the judgment was a milestone in protecting the consumers.
Woolley said insurers would now know that they could not hide behind the fine print.
“When an insurer who has a policy in place has a large incident that causes a loss, the insurers will then run out a whole rim of experts to come and see if they complied with national regulations regarding the I’s and crossing the T’s,” Woolley said.
“Whether you have painted your fire hydrants orange instead of red and use that to reject your claim under the guise of non-compliance with the national regulations, saying essentially what we are calling post-risk underwriting instead of underwriting before they take on risk and now come on post-the risk.”
Woolley said that this had been a long, tiring journey for them as their clients had not only been devastated by the pandemic but also the refusal of insurers to pay. “Business Interruption insurance should help you when you are on your knees,” he said.
BUSINESS REPORT