Cape Town - Businesses that took insurance giant Santam to court demanding that it honour insurance policies to cover the costs of losses caused by the Covid-19 pandemic, will have to wait a bit longer after the company indicated that it would appeal against a Western Cape High Court ruling.
The court dismissed Santam’s argument that it should not be held liable for the effects of the global pandemic.
The ruling was made last week. The judgment ordered the insurer to pay Ma-Afrika Hotels 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. But in response, Santam says the court erred in its judgment regarding causation and the insured peril, the trends clause and the indemnity period.
“It is therefore important to take the matter to the Supreme Court of Appeal. After careful consideration and engagement with key stakeholders, Santam has decided to apply for leave to appeal the judgment of the Western Cape High Court in the matter between the insurer and Ma-Afrika Hotels and Stellenbosch Kitchen. The matter relates to policies with Contingent Business Interruption (CBI) infectious disease extensions,” said Santam in a statement.
“The significance of the CBI matter to the insurance industry and the precedents at stake necessitate continuing to the next stage in the process of obtaining legal finality. We have also discussed the implications of the judgment with our lead re-insurers in arriving at our decision.”
Ma-Afrika and Stellenbosch Kitchen were seeking about R122.4 million through five policies. Ma-Afrika has expressed its disappointment at the decision for Santam to appeal against the matter.
Ma-Afrika Hotels chief operating officer, Elna du Toit, said: “This appeal will further delay the final outcome and will again postpone payment of our claims until March/April 2021 at the earliest. By then it would have been more than a year from when we lodged our business interruption insurance claims (and Santam’s rejection thereof), before we and our employees will have any financial certainty.”
Insurance Claims Africa Ryan Woolley said: “This is nothing more than a delay tactic that will further cripple tourism and hospitality businesses that are already hanging on by a thread. From the outset, the insurance companies promised they wanted legal certainty as quickly as possible.”
The tourism and hospitality sector sustains over 740 000 direct and 1.5 million indirect jobs, and contributes 8.6% to the South African economy. The Federated Hospitality Association of South Africa (Fedhasa) has also expressed disappointment.
Fedhasa chairperson Rosemary Anderson said: “The hospitality sector is unlikely to forget the mistreatment it has endured from the insurance industry, aside from a few exceptions, when it is precisely for this kind of event that we faithfully pay our expensive business interruption insurance extension premiums in the first place.”
Cape Argus