Santam assessing Covid-19 business interruption claims

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Santam says given what is at stake, it and its reinsurers that the matter must go to the next stage in the process to obtain legal certainty from a higher court.
Photo: Gallo Images/Jacques Stander
Santam says given what is at stake, it and its reinsurers that the matter must go to the next stage in the process to obtain legal certainty from a higher court. Photo: Gallo Images/Jacques Stander
  • Santam will start the process of assessing claims of policies affected by a high court judgment last year.
  • Santam still intends to appeal the indemnity period of the high court judgment, which ordered it to pay 18 months' worth of losses to Ma-Afrika Hotels and Stellenbosch Kitchen.
  • Since the high court ruling, Santam increased its provision for contingent business interruption claims by R1.7 billion.


Insurer Santam [JSE:SNT] said it will start assessing claims of Covid-19 related business interruptions, specifically related to policies impacted by a high court judgment issued last year.

In a shareholder notice issued on Monday, Santam said that the claims relate to a Western Cape High Court ruling which it lost against Ma-Afrika Hotels and Stellenbosch Kitchen. The two businesses had joined with Insurance Claims Africa (ICA) – which represents over 750 tourism and hospitality businesses - to lodge an application against Santam over the losses they suffered due to the lockdown which prevented them from operating.

The court found that Santam was liable to pay for business interruption losses due to the Covid-19 lockdown. Santam was ordered to pay 18-months' worth of losses to Ma-Afrika Hotels and Stellenbosch Kitchen, Fin24 reported.

Santam had decided to apply for leave to appeal the judgment. According to Santam its leave to appeal was to be heard on 8 December but Ma-Afrika Hotels and Stellenbosch Kitchen's legal team was not available.

Last year, another insurer, Guardrisk was granted leave to appeal a separate ruling by the Western Cape High Court to pay Café Chameleon's business interruption claim. But the Supreme Court of Appeal (SCA) had dismissed the matter.

Santam previously said it wanted to discuss the implications of the SCA's judgment on Guardrisk on its own case, but believes there are material differences between its case and that of Guardrisk and Café Chameleon, Fin24 previously reported.

"The Ma-Afrika [high court] judgment resolved that there is 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 SCA decision in the Café Chameleon matter confirmed that approach," Santam said in a statement issued on Monday.

"Santam 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."

However, Santam will still go ahead with the appeal to challenge the indemnity period. It believes the indemnity period should be three months - as opposed to the 18 months decided by the courts. It said the outcome of the appeal relating to the indemnity period and the extent of its reinsurance recoveries may impact its assessment of the estimated net contingent business interruption claims. "This could result in significantly higher or lower claims," said Santam.

It said the SCA judgment on Guardrisk does not impact its net contingent business interruption provision. 

Santam said that following the high court Ma-Afrika judgement, it increased its business interruption claims provision by R1.7 billion – this is in addition to the R1.3 billion raised in June 2020. So far Santam has paid R1 billion out of the R1.3 billion it originally raised to provide relief to small and medium-sized businesses in hospitality, leisure and non-essential retail services – that have contingent business interruption cover in their policies. 


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