Key Covid-19 insurance claims case heads to SCA
Durban - SOUTH African insurers, legal experts and tourism businesses are waiting with anticipation for the outcome of Guardrisk’s fight against a Covid19 business interruption insurance claim that ultimately may hold in the balance the fate of an estimated R15 billion in claims.
Guardrisk’s appeal against a Western Cape High Court decision that ruled in July that it must pay Cafe Chameleon’s contingent business interruption insurance (CBI) claim has been set down to be heard in the Supreme Court of Appeal in Bloemfontein on Monday.
This follows a second victory for businesses in a similar Western Cape High Court judgment against Santam this week, which ordered the country’s largest insurer to pay Ma-Afrika Hotels and The Stellenbosch Kitchen’s insurance claims.
The firms were assisted by Insurance Claims Africa (ICA), a specialist claims preparing company that has also partnered with its appeal.
The court found in favour of Ma-Afrika, stating Santam was liable to pay full business interruption losses, including the impact of the government’s lockdown response to Covid-19. Ma-Afrika Hotel Group chief executive André Pieterse said it was “grateful” for the ruling.
Santam said in a statement that the “detailed and complex” judgment and its broader implications had to be carefully considered and discussed with its stakeholders, including reinsurers.
“The issues pertaining to CBI are global in nature and are also subject to appeal court proceedings in various countries,” Santam said.
ICA chief executive Ryan Woolley said the firm had outstanding claims from about 800 tourism sector businesses amounting to between R6bn and R7bn, and it had decided to get involved in the legal action after it became clear “insurers had drawn a hard line in the sand” regarding claims.
He estimated that nationally there were about R15bn in Covid-19-related Cafe Chameleon for claims.
He said insurers were liable for business interruption cover, where it included insurance against infectious and notifiable diseases.
“The MA-Afrika judgment has arrived in time to provide the SCA with further guidance from respected Cape high court judges. This is a matter of national importance and the judgment reiterates the need to protect the consumer from insurers trying to change the terms of the contract post loss,” Woolley said.
Cliffe Dekker Hofmeyr attorney Roy Barendse said the latest judgment was “correct” and “in line with international trends. It sets precedent for businesses with business interruption insurance that contains the ‘contagious/infectious disease’ extension in their policy wording to enforce claims.
“Many businesses lodged claims that were rejected, and these claims will certainly be prosecuted in the wake of this judgment,” Barendse said. “That said, the Ma-Afrika judgment is likely to be appealed and we are keenly awaiting the Cafe Chameleon versus Guardrisk judgment.”
ENS Africa attorneys Rob Scott and Zara Sher said although the judgment was in line with the Guardrisk judgment, it did not set a binding precedent.
“The judgment can, and may, be appealed relative to the court’s interpretation of the policy wording and coverage afforded by the policy ,” Sher said.
Scott said whether any appeal would ultimately be argued in the Santam matter depended on the outcome of the Guardrisk appeal, and the appeal in the Financial Conduct Authority v Arch Insurance (UK) Limited and eight others case in the UK, and views taken by reinsurers in relation to the judgments.
Schindlers attorney Alex Veich said precedents set by the judgments “may not hold weight” in favour of all policy holders as the terms of each claim had to be determined on its own merits together with specific policy wording.
Durban Chamber of Commerce and Industry chief executive Palesa Phili said the judgment in favour of small businesses would provide relief to business owners.