DURBAN - Financial services group Santam announced on Monday that it would begin the process for assessing claims for policies with contingent business interruption (CBI) extensions in line with the recent court judgments.
In a press statement the insurance group said that the claims assessment process would specifically apply to policies 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. In line with the court rulings, this applies to Santam policies written by its Hospitality and Leisure Division (H&L).
Santam said that the process would include assessments for the applicable H&L business interruption claims that were previously rejected in the months after the national lockdown commenced on 27 March 2020.
The December 2020 SCA decision favoured the insurance claimant, Café Chameleon, and said that now that legal certainty has been established, there should be nothing left for insurers to do but resolve their customers’ claims, for once and for all.
In mid-December, the SCA dismissed the appeal ordering Guardrisk to settle Café Chameleon’s full claim and legal costs.
The judgment categorically stated that the government’s imposition of a lockdown in response to multiple outbreaks of a ‘notifiable disease’ that is Covid-19, throughout the country, and predominantly in Cape Town, where Café Chameleon’s operates its business, was covered by the infectious diseases clause.
The Ma-Afrika judgment resolved that there was 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. The SCA decision in the Café Chameleon court case confirmed that approach.
Specialist public loss adjuster, Insurance Claims Africa which had called the SCA judgement a precedent setter said last month, Guardrisk wrote to clients confirming it accepted the SCA ruling and would abide by it. Hollard had also agreed to abide judgment, saying it would start processing claims as long as the policy contained the appropriate and similar cover to that assessed by the SCA in the Café Chameleon case.
Santam said that the assessment process for CBI claims required that businesses provide audited financial statements and other documentation to support their claims.
“Santam has previously advised intermediaries of these requirements and will continue to do so over the next few weeks. Clients are urged to work closely with their intermediaries to ensure that the requirements for processing claims are met.”
The insurance group said that it had already paid out more than R1-billion 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.
The company said it further committed up to R400-million in Covid-19 funding to provide relief through premium reductions, premium refunds, support to SMMEs, corporate social responsibility and contributed to the Solidarity Fund.
The group said that as previously communicated, the amounts paid as part of the R1-billion relief to insured businesses would be offset against valid claims arising from the assessment process.
Santam said it respected the decision of the courts and believes that the recent judgments were 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.
“However, the company believes that there are valid reasons to appeal the judgment of the Western Cape High Court in the Ma-Afrika case with respect to the indemnity period. The company will therefore continue with its application for leave to appeal the Ma-Afrika judgment at the SCA, specifically with regard to the indemnity period,” read the company statement.
BUSINESS REPORT ONLINE