The Supreme Court of Appeal (SCA) has instructed Santam to pay out for the full term of business interruption to Ma-Afrika Hotels and Stellenbosch Kitchen.
Santam had appealed an earlier judgment in the Western Cape High Court which ruled in favour of Ma-Afrika and Stellenbosch Kitchen.
Thursday’s judgment ended the final stretch of the battle to hold Santam liable for Covid-19 business interruption claims in the tourism and hospitality industry.
Although Santam initially agreed to pay the claims, it only paid for three months of business interruption instead of the 18 months stipulated in the policies.
This decision means that Santam now has to pay Ma-Afrika Hotels and Stellenbosch Kitchen for the full 18-month period.
“Santam originally argued that it had no obligation in terms of the policy. Although Santam acknowledged its liability after following the judgment in the Cape High Court in November 2020, it argued that it was only liable for 3 months, despite the full bench of the Western Cape High Court rejecting their argument,” says André Pieterse, chairman of Ma-Afrika Hotels.
Insurance Claims Africa (ICA), a specialist loss adjustor, supported Ma-Afrika and Stellenbosch Kitchen during its fight to get their business interruption claims paid out.
“We are extremely happy with this decision as it provides much needed certainty for the finalisation of outstanding claims for businesses in the tourism and hospitality sector, who have had to wait more than 18-months for valid claims to be settled,” Ryan Woolley, chief executive of ICA, said.
ICA represents over 850 claimants in the tourism and hospitality sector in their battle to get large insurers to pay out on business interruption claims.
The court’s decision in this matter is crucial for thousands of Santam’s hospitality and leisure division’s business interruption policyholders. Once insurers settle the claims, funds will flow to assist a desperate sector of the economy.
Woolley says the certain insurers’ endless litigation and slow progress on payment of claims had a devastating impact on businesses in a sector that remains severely challenged by the pandemic, affecting the lives of thousands of employees and their dependents.
“Insurers’ behaviour throughout this debacle has been a travesty. In essence, they chose to abandon their customers in their darkest time of need. This has affected not only the reputations of short-term insurance companies, but also insurance as an overall category.
“Their Stalingrad strategy of deny, delay and defend has eroded the public’s trust in insurance and we anticipate that it will take significant effort, commitment and time to restore customers’ faith in the sector,” Woolley says.
Ma-Afrika Hotels and Stellenbosch Kitchen employ more than 160 people.