Insurance major, Santam, remains confident of its interpretation of causation as it applies to COVID-19-related business interruption losses, and says it has made appropriate provisions for such claims.
This Stock Exchange News Service (SENS) announcement was made late yesterday (July 7) in response to the Western Cape High Court judgement in which Judge Andre le Grange compelled an insurance company to honour the COVID-19 Business Interruption (BI) insurance claims of a Cape Town restaurant (Café Chameleon).
CEO of specialist loss adjustment firm, Insurance Claims Africa (ICA), Ryan Woolley, hailed the judgement a “significant win” for the tourism and hospitality sector.
“While there is no doubt that this is precedent setting, we expect the judgement to be appealed, so it is still a long way from payment,” he said. ICA currently represents over 500 claimants against several insurers – including Santam – for outstanding BI insurance claims amounting to around R4bn (€205 million).
About 200 of those 500 claims are against Santam.
“While all insurers have different policy wording in these extension clauses, their responses have been virtually identical, saying that the Tourism and Hospitality BI extension policies were never meant to cover pandemics,” explained Woolley.
He pointed out that insurance companies were in the business of risk assessment, and employed some of the most qualified risk research teams in the world.
“They have known about other infectious diseases, such as Sars, MERS and Ebola, for many years, and therefore should have anticipated a pandemic,” said Woolley, commenting that it was “unconscionable” of insurers to penalise their clients for their own poor underwriting skills.
The Santam SENS statement, however, notes that the company 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,” read the statement.
It continued: “Santam understands the financial distress on the businesses and individuals impacted by the National Lockdown to combat COVID-19, and has contributed significant funds towards financial relief during this crisis.”
A Santam spokesperson added that the insurer’s balance sheet was “sufficiently robust” to accommodate either interpretation of cover.
