Insurance giant Santam used ‘Stalingrad strategy of delay tactics’
Cape Town - Public loss adjustment firm, Insurance Claims Africa (ICA) representing over 850 claimants in the tourism industry has slammed Santam, saying its three months full and final settlement to settle Covid-19 business Interruption claims was “unconscionable”.
“While we are encouraged by Santam’s acknowledgement that legal certainty has been established, they continue to pick and choose what suits them in the court rulings. Santam’s Stalingrad strategy of delay, deny and defend has put its customers under excruciating financial stress. The real tragedy is that if these businesses are forced to shut down as a result of Santam’s non-payment, their claim against the insurer is extinguished,” ICA chief executive Ryan Woolley said.
ICA said they were “unsurprised but disappointed” by Santam’s decision to limit its full and final settlement offers to three months, while there was an appeal pending at the Supreme Court of Appeal (SCA) in respect of the indemnity period.
Santam and other insurers had refused to settle their customers’ business interruptions claims, citing the government’s imposed lockdown, and not Covid-19, as the cause of the losses suffered by business.
However the courts found that the two events were linked as in a Western Cape High Court judgement between Ma-Afrika and Santam.
The 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 court had ordered Santam to pay Ma-Afrika Hotels for the full 18-month period of its contract but Santam will appeal the question of the indemnity period at the Supreme Court of Appeal on February 16.
Earlier this month, in a twist ahead of the SCA hearing, Santam said it would offer its Hospitality & Leisure customers a full and final settlement of only the months of losses, despite many policyholders having indemnity periods of 6 -, 12-, and 18-months in their contracts with the insurer.
On the indemnity appeal, Santam said the Ma-Afrika judgment did not set legal precedent for the indemnity period for all other policies.
"As previously stated, the 18-month indemnity period applies only to the Ma-Afrika policy and can therefore not be construed as legal precedent, particularly in view of Santam’s intention to appeal this ruling," said Santam.
It added that the Hospitality and Leisure Division policies that were impacted by the recent court rulings, currently being processed, specifically carry three-month indemnity periods.
"It is for this reason that Santam is offering full and final settlements in respect of these claims."
“Santam has previously stated that it respects the decision of the courts and believes that the recent judgments are 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."
The insurer said it had wanted a speeding resolution but first needed legal clarity which emanated from the judgement in the involving Café Chameleon and Guardrisk, the Supreme Court of Appeal issued on December 17, 2020.
"Whilst awaiting legal clarity, Santam paid out R1-billion in interim relief to 2 500 SMEs that had CBI cover," the insurer said.