The appeal on the indemnity period for Business Interruption (BI) insurance for the Ma-Afrika Hotels and Stellenbosch Kitchen v Santam case will be heard at the Supreme Court of Appeal (SCA) on Friday next week (August 27).

In November last year, the Western Cape High Court – presided over by a full bench of three senior judges – unanimously ordered Santam to pay Ma-Afrika Hotels and Stellenbosch Kitchen for the full 18-month period of its contract, but Santam continues to argue that it is only liable for three months. 

The appeal to the SCA will determine the length of indemnity for which Santam is liable.  

Insurance Claims Africa (ICA) – which represents over 850 claimants in their ongoing fight to receive final payments from insurers – believes that the SCA case will bring 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. 

“The Court’s decision in this matter will be crucial for thousands of Santam’s Hospitality & Leisure division’s Business Interruption policyholders, and will provide much-needed funding to a desperate sector of the economy,” said ICA CEO, Ryan Woolley.

He reiterated earlier concerns that the slow progress on payment of claims by certain insurers had had a devastating effect on businesses in a sector that remained severely impacted by the pandemic.

“It is a travesty that it has taken this long for these insurers to honour their contractual obligations with their customers,” said Woolley. “It is time for them to restore some credibility to the industry and quickly settle these outstanding claims on a reasonable basis.”

Santam’s position

Santam believes the Western Cape high court erred in its judgment in applying an 18-month indemnity period across the entire Ma-Afrika policy, noting that companies’ policies, particularly those impacted by the recent court rulings, specifically carried three-month indemnity periods.

An explainer on the insurance major’s website says: “The H&L policy schedule includes a memorandum in bold that limits the indemnity period for extensions under the BI section to three months. The BI extensions and clauses are defined in the policy wording and specifically include the Infectious Diseases/Pollution/Shark and Animal Attack Extension.”

The explainer continues: “Whatever the outcome of the indemnity period appeal, the question of indemnity period will be considered on the individual facts and underwriting of each particular policy.

“Such facts will include an understanding of the common intention of the parties as to the cover in place. Common intention will be informed by reviews of any explanations and or training provided on the policy cover, historic actions of the insurer and the record of advice provided to the client.”

A spokesperson for the company said Santam was confident that the memorandum on the schedule applied to the infectious disease extension and that the common intention of the parties would support the three-month indemnity period.