Insurers liable for Covid-19 business interruption claims
CAPE TOWN – Insurance Claims Africa (ICA) has welcomed a UK High Court ruling that insurers were liable for Covid-19 business interruption insurance claims, and it said it believes this was a positive development for South African claimants.
Yesterday, the UK’s Financial Conduct Authority (FCA) said the Court found in favour of the arguments advanced for policyholders on the majority of the key issues.
The FCA had asked the High Court for a ruling on how a representative sample of business interruption policy wordings respond to Covid-19 related losses.
The test case had removed the need for policyholders to resolve many key issues of contractual uncertainty and causation individually with their insurers.
The matter might be appealed by insurers, but this was as yet unclear, ICA chief executive Ryan Woolley said.
ICA is representing more than 700 businesses in the South African tourism and hospitality sector in their battle to get large insurers to pay out on these claims.
“The UK case was based on business interruption policy wording that is very similar to the policy wording in many South African insurance policies, said Wooley.
The UK decision did not set legal precedent in South Africa, but it was "a strong guide" in favour of South African claimants, he said.
South African insurers have said they require legal certainty in order to honour their customers’ claims.
In July, the Financial Services Regulatory Authority instructed the insurers to pay claims.
Also in July, the Western Cape High Court, in the matter of Cafe Chameleon versus Guardrisk, rejected the insurers’ argument that the losses suffered by the claimant was due to the lockdown, and not the Covid-19 pandemic.
Meanwhile a Western Cape High Court case, in which ICA and Ma-Afrika were challenging Santam’s refusal to pay claims, had been adjourned for judgment, which was expected before mid-November.
Since March 2020 when the Covid-19 outbreak occurred and during the national lockdown, tourism and hospitality businesses have suffered big losses and many have been forced to close their doors, putting thousands of jobs at risk.