Santam to appeal business interruption judgement
Cape Town – Cape Town-based short-term insurer, Santam has said that after careful consideration and engagement with its key stakeholders, it has decided to apply for leave to appeal the judgment of the Western Cape High Court in the matter between the insurer and Ma-Afrika Hotels and Stellenbosch Kitchen. The matter relates to policies with Contingent Business Interruption (CBI) infectious disease extensions.
Santam said it believes that the high court erred in its judgment regarding causation and the insured peril, the trends clause and the indemnity period, and it is, therefore, important to take the matter to the Supreme Court of Appeal.
The insurer stated that the significance of the CBI matter to the insurance industry and the precedents at stake necessitate continuing to the next stage in the process of obtaining legal finality, explaining that it had also discussed the implications of the judgment with its lead reinsurers in arriving at the decision. It said its reinsurers are key stakeholders in the insurance value chain as they are in effect insurers to the insurer, and they agreed with it on the need to obtain legal certainty from a higher court in the matter.
The Ma-Afrika judgment refers to both the Café Chameleon vs Guardrisk matter as well as the Financial Conduct Authority (FCA) judgments in the United Kingdom. All of these judgments have been taken on appeal with decisions expected late in 2020 or early in 2021.
While awaiting the legal process to be concluded, Santam says it has paid out more than R1-billion in interim relief to assist nearly 2 500 small and medium-sized businesses in the hospitality, leisure and non-essential retail services with CBI cover in the policies. These are considered to be advance payments against any finally determined claims, in the event that the courts ultimately rule in favour of the policyholders. Should the courts rule in favour of Santam, then the amounts paid will be considered relief payments and will not be recovered from policyholders.
In addition to the R1-billion relief payment, the company has to date also committed up to R400-million in Covid-19 funding to provide relief through premium reductions, premium refunds, support to SMME’s in the industry, corporate social responsibility and Government’s Solidarity Fund.