Court issues landmark ruling against Santam in Covid-19 insurance case

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A general view of Santam Insurance Head Office on June 24, 2020 
Photo: Gallo Images/Jacques Stander
A general view of Santam Insurance Head Office on June 24, 2020 Photo: Gallo Images/Jacques Stander
  • In a 42-page judgment handed down in the Western Cape High Court on Tuesday afternoon, the court found that Santam was liable to pay for business interruption losses related to the Covid-19 lockdown. 
  • It also ordered the insurer to pay for the impact over the policy period of 18 months and that it should pay the applicant's legal costs.
  • It cited similar Covid-19 related cases from all over the world, including the United Kingdom and the United States.


The High Court has found in favour of Ma-Afrika Hotels and Stellenbosch Kitchens against insurance giant Santam, in a case over business interruption insurance during the Covid-19 lockdown.

The two businesses had joined up with Insurance Claims Africa (ICA) in litigation against Santam earlier this year. ICA is a public loss adjustment company that has been representing over 750 tourism and hospitality businesses in a bid to get insurers to pay up business interruption claims.

In a 42-page judgment handed down in the Western Cape High Court on Tuesday afternoon, the court found that Santam was liable to pay for business interruption losses related to the Covid-19 lockdown. It also ordered the insurer to pay Ma-Afrika for the impact over the policy period of 18 months and that it should pay Ma-Afrika's legal costs.

It cited similar Covid-19 related cases from all over the world, including the United Kingdom and the United States.

At the heart of the case lay Santam's argument that Covid-19 is not a notifiable disease. It rejected lockdown claims from Stellenbosch Kitchen and Ma-Afrika because whether or not there were Covid-19 cases within the radius the insurer covers, the businesses would have been forced to suspend trade, the insurer said in its court papers.  

The judgment noted that Santam had argued the policies "insured loss, subject to their terms, not economic hardship as a consequence of the Covid-19 pandemic".

But when the case was heard in September, lawyers for Ma-Afrika accused Santam of hiding behind semantics.

Ma-Afrika chairperson and CEO André Pieterse said he hoped the outcome would bring some certainty. He also thanked the insurer for providing relief payments in the interim.

"This outcome will greatly assist in allowing ourselves and others in the tourism and hospitality sector to weather the ongoing Covid-19 storm. 

"We are also grateful to Santam for the interim relief payments received in August 2020, which allowed us to retain our entire staff complement of 210 loyal people with more than 1 000 direct dependents.  We are hopeful that this decision by the court will terminate the litigation, thereby bringing an end to the insecurity and suffering of many."

In a joint statement with Ma-Afrika, insurance body ICA welcomed the judgment, calling it a "resounding victory" for tourism and hospitality businesses.

In September, Santam said it had set aside R1.3 billion in the six months to end June for business interruption claims as its "best estimate" – this including the R1 billion it was paying out as relief. However, it added that if the court ruled against it in the Ma-Afrika/ Stellenbosch Kitchen case, it was uncertain about what it might have to cough up.

"The R1 billion payment has been received extremely positively by the clients impacted, particularly how we did it quickly with no admin hassles," CEO Lize Lambrecht said at the time.

In a similar case, a ruling in July involved Café Chameleon and insurer Guardrisk, where the court found the insurer was liable for the restaurant's losses since the start of the pandemic. That case is due before the Supreme Court of Appeal this month. 

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