Santam seeks legal clarity over COVID-19 business interruption claims

Short-term insurer Santam said today it had filed its opposing affidavit in an application brought against it in the Western Cape High Court by an unnamed insured hotel group.

The company, in a market update, said it understands the financial distress on the businesses and individuals impacted by the national lockdown to combat COVID-19.

“Notwithstanding this, Santam can only commit to paying claims in line with its policy provisions. We do also recognise the public interest in this matter and are therefore seeking legal certainty by having this matter speedily determined by the courts of South Africa,” the company said.

“Santam is aware of a High Court judgment in relation to a claim against another insurer, which was handed down in favour of the claimant very recently. We are currently studying the judgement closely. We remain confident of our interpretation of causation as it applies to COVID-19 related business interruption losses, and have made appropriate provisions for such claims.”

The Western Cape High Court has already compelled insurance company Guardrisk to honour the COVID-19 Business Interruption insurance claims of Cafe Chameleon, a Cape restaurant.

“This is a significant win for the tourism and hospitality sector. While there is no doubt that this sets a precedent we expect the judgment to be appealed, so it is still a long way from payment. Of critical importance, is the fact that Judge Andre le Grange rejected the insurers’ argument that the losses suffered by the claimant was due to the lockdown, and not the COVID-19 pandemic,” said Ryan Woolley, CEO of Insurance Claims Africa.

The tourism industy has borne the brunt of COVID-19 as countries around the world, including South Africa imposed travel bans in an effort to curb the spread of the deadly virus which has already infected more than 11.6 million people across the world and claimed over 530 000 lives.

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