The Western Cape High Court found in favour of Ma-Afrika Hotels and Stellenbosch Kitchen against insurance giant, Santam, on Tuesday, November 17 according to a press statement released by
The case was brought by Ma-Afrika Hotels along with Insurance Claims Africa (ICA), a loss adjustment company, against Santam, which had refused to settle their business interruption insurance claims even though their policies included cover for infectious or notifiable diseases.
ICA called it a victory for the tourism and hospitality industry and called for the immediate resolution and payment of all valid business interruption claims by insurance companies.
The court found in favour of Ma-Afrika, saying Santam was liable to pay the full business interruption losses including the impact of the government’s response to Covid-19 (i.e. lockdown losses). The judgment ordered the insurer to pay Ma-Afrika for the impact over the entire policy period of 18 months, without limitations. The court also ordered that Santam pay Ma-Afrika’s legal costs.
André Pieterse, chairman and ceo of the Ma-Afrika Hotel Group, the successful applicants in the case against Santam, says, "We are grateful for the court's decision in our favour. We are thankful to our legal team, led by Adv Jeremy Gauntlett QC SC, and the support from Ryan Woolley and the clients represented by ICA. 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 1000 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."
Ryan Woolley, ceo of ICA, which is representing over 750 businesses in the tourism and hospitality sector in their battle to get large insurers to pay out on these claims, says: “Santam has consistently said that it requires legal certainty in order to honour their customers claims, and most other insurers have followed suit. In our view, today’s judgement from a full Western Cape High Court bench, provides the legal certainty required to finalise all claims relating to Business Interruption caused by the pandemic. The seismic impact of COVID-19, coupled with insurers’ unwillingness to honour their obligations to their customers, has deepened these businesses’ losses, with some unable to ever recover. We believe it is now time for the insurance sector to step up and display the ethical leadership that has been missing from their response to this crisis thus far.”
There have been a number of legal and regulatory actions in the last few months that have, in ICA’s view, provided additional certainty that insurers are liable for Business Interruption cover, where it includes insurance against infectious and notifiable diseases. In July, the Financial Services Regulatory Authority (FSCA) instructed the Insurers to pay claims; also in July, the Western Cape High Court, in the matter of Cafe Chameleon v Guardrisk, rejected the insurers’ argument that the losses suffered by the claimant was due to the lockdown. Guardrisk’s appeal of this matter will be heard in the Supreme Court of Appeal (SCA), on Monday, 23 November. ICA has partnered with Cafe Chameleon in this matter.
Ryan said: “The Ma-Afrika judgement 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 judgement reiterates the need to protect the consumer from Insurers trying to change the terms of the contract post loss.”
“The real question is, are the insurers, which include Old Mutual, Guardrisk, Santam, Bryte, Hollard, F&I, Chubb, TRA, Lombard, AIG and Monitor, truly looking for certainty or simply a way out of their obligations towards their customers?”
“We all know that this was a test case, not just for Santam but for all insurers refusing to pay these claims. By settling valid claims expeditiously, they have the opportunity to contribute to the survival of businesses in this critical sector, and to the preservation of thousands of jobs. Failure to do so will ensure they are remembered in history as companies that contributed directly to the demise of thousands of businesses and jobs during the country’s worst economic and social crisis.”
