CAPE TOWN - After a David and Goliath battle, insurance giant Santam has been found to be in the wrong for blocking a multimillion rand payout to hospitality businesses Ma-Afrika Hotels and Stellenbosch Kitchen.
Their policy writing has also been called out for being ambiguous and difficult to navigate.
The Supreme Court of Appeal (SCA) on Thursday dismissed, with costs including those of three counsel, Santam’s argument concerning the indemnity periods in relation to business interruption losses under insurance policies.
“The behaviour of insurers throughout this debacle has been a travesty,” said Ryan Woolley, Insurance Claims Africa chief executive.
“In essence, they chose to abandon their customers in their darkest time of need. This has impacted not only the reputations of short-term insurance companies, but also on insurance as an overall category.
“Their Stalingrad strategy of deny, delay and defend has eroded the public’s trust in insurance and we anticipate that it will take significant effort, commitment and time to restore customers' faith in the sector,” said Woolley.
Ma-Afrika operates a string of hotels and businesses in the Western Cape, including Best Western Cape Suites Hotel, Rivierbos Guest House in Stellenbosch, and the Stellenbosch Hotel.
At the time of the outbreak of the Covid-19 pandemic in March 2020, Ma-Afrika held four insurance policies with Santam with a combined total of business interruption cover of R105 482 456, while the Stellenbosch Kitchen was covered for loss of revenue to the amount of R16 947 368.
The businesses were informed by Santam that four of the five claims had been rejected, with only the claim for the Stellenbosch Hotel being accepted, and only for March 15 to 27, 2020.
Before the SCA, Santam had argued one of it’s clauses – that the indemnity cover “was for three months, not 18 months”.
Separate from dismissing Santam’s argument, the SCA also said their policies were ambiguous.
“Given that the policies are admittedly difficult to navigate, and assuming, at best for Santam, that there is a meaningful degree of uncertainty concerning the indemnity periods, a conclusion might be reached that on that aspect the policies are ambiguous.
“Of course, that for obvious reasons is a conclusion that Santam is loath to concede because the long-standing contra proferentem rule will apply against it and the interpretation advanced on behalf of Ma-Afrika and the Kitchen must triumph.
“Against the conclusions set out above, we do not need to engage in the further debate of whether the indemnity period is a limitation and therefore should be restrictively applied,” the SCA ruled.
Reacting to the judgment, Santam said around a third of 3 200 business insurer claims would be affected by the verdict.
“We recognise that Covid-19 has had a devastating effect on the economy and in particular on businesses. We also understand that our clients were affected by the process of attaining legal certainty on this one remaining CBI matter.
“We are, however, very pleased that this judgment allows us to proceed to finalise all impacted CBI claims as soon as possible in line with the ruling of the SCA,” said Santam group chief executive Lizé Lambrechts
Cape Times