JSE-listed Santam believes that the Western Cape Excessive Court docket’s Ma-Afrika enterprise interruption insurance coverage judgment, handed down in November and linked to the Covid-19 pandemic, doesn’t set a authorized precedent for the indemnity interval for all different such insurance policies.
The short-term insurance coverage large went additional in a press release despatched to Moneyweb, saying that it’s of the view the Excessive Court docket “erred in its judgment in making use of an 18-month indemnity interval throughout the complete coverage” of the Cape-based resort group.
Santam’s feedback on the case and the broader enterprise interruption insurance coverage debacle comes within the wake of the most recent salvo on the problem on Tuesday from specialist public loss adjustment agency, Insurance coverage Claims Africa (ICA).
“The judgment of the Western Cape Excessive Court docket on the indemnity interval applies solely to the Ma-Afrika coverage. Santam’s view is that the indemnity interval is restricted to a few months as said within the Ma-Afrika coverage. Nevertheless, the court docket dominated that, for the Ma-Afrika coverage, the indemnity interval is 18 months,” Santam identified in its assertion.
The group is interesting the indemnity interval facet of the judgment on the Supreme Court docket of Enchantment (SCA) in Bloemfontein.
An “indemnity interval” refers back to the most interval (in months) for which a policyholder can declare for losses in a enterprise interruption coverage.
Following a landmark SCA ruling in December in one other case involving Cape restaurant Café Chameleon and short-term insurance coverage business peer Guardrisk, Santam introduced on January four that it might begin assessing enterprise interruption claims that had been particularly impacted by the Ma-Afrika and Café Chameleon judgments.
Nevertheless, Santam’s ultimate settlement provide to affected policyholders is restricted to a few months. The transfer has raised the ire of ICA, which claims that Santam is short-changing its shoppers largely within the embattled tourism and hospitality business.
In its newest assertion on the problem, Santam additionally says you will need to notice that the SCA judgment within the Café Chameleon case didn’t and was not required to deal the with the 18-month indemnity interval. Consequently, Santam is interesting the indemnity interval facet of the Ma-Afrika case.
Santam additional burdened the variations between regular enterprise interruption cowl and insurance policies which have further cowl for lack of revenue whereas a enterprise is pressured to shut.
“Companies usually have an insurance coverage coverage that covers property harm by fires, floods and different perils inflicting bodily harm to the insured premises… As well as, companies have the choice to take out cowl for lack of income for an agreed interval whereas they don’t seem to be capable of function due to bodily harm to their enterprise premises,” it factors out.
“It is a customary enterprise interruption coverage for bodily harm. The indemnity interval in the usual cowl offered by the enterprise interruption part coverage within the Ma-Afrika coverage is 18 months. This isn’t widespread throughout all insurance policies. Most insurance policies usually have shorter indemnity durations,” Santam provides.
“Some insurance policies provide extensions to the enterprise interruption insurance coverage which covers lack of income attributable to interruption to the enterprise by plenty of occasions past bodily harm, together with infectious ailments. The indemnity interval in respect of this prolonged cowl is clearly said as three months within the related Santam insurance policies,” the group explains.
In the meantime, Santam denied accusations from ICA and several other affected policyholders that it was trying to delay the method in paying out Covid-19 linked enterprise interruption insurance coverage claims.
“Santam has constantly stated that it was pursuing a speedy decision of the matter. The Santam [Ma-Afrika] case was heard on eight September 2020 and judgment was issued on 17 November. In a associated case involving Café Chameleon and Guardrisk, the SCA issued its judgment on 17 December 2020,” the group notes in its assertion.
“Solely at that time might Santam take into account the matter as having reached ultimate authorized readability. Following engagement with its stakeholders, Santam introduced on four January 2021 that it might begin assessing enterprise interruption claims that had been particularly impacted by the judgments,” it factors out.
Santam reiterated that it respects the choice of the courts.
The group says that it believes that the latest court docket judgments are adequate to offer authorized certainty by way of the proximate explanation for enterprise interruption losses for insurance policies with the identical circumstances, traits and circumstances to the Ma-Afrika and Café Chameleon judgments.
“The method of searching for authorized readability was agreed by all events involved and due to this fact it’s unfaithful that Santam has tried to delay the method…While awaiting authorized readability, Santam paid out R1 billion in interim reduction to 2 500 SMEs that had Contingent Enterprise Interruption [CBI] cowl,” it factors out.
“Santam and some different South African insurers are the one insurers on this planet which might be identified to have provided interim reduction to shoppers while awaiting ultimate authorized readability,” the group says.
“It is very important admire that the CBI issues are international in nature, impacting a number of stakeholders together with reinsurers who’re successfully the insurer’s insurer. In the important thing jurisdictions, together with the UK, this matter has not but been finalised attributable to its advanced nature,” Santam added.
“As beforehand said, the 18-month indemnity interval applies solely to the Ma-Afrika coverage and may due to this fact not be construed as authorized precedent, significantly in view of Santam’s intention to enchantment this ruling,” the group reiterated.
“The Hospitality & Leisure Division insurance policies which might be impacted by the latest court docket rulings and are at the moment being processed by Santam particularly carry three-month indemnity durations. It is because of this that Santam is providing full and ultimate settlements in respect of those claims.”
In the meantime, Santam additionally clarified that companies which have incurred claimable losses and have gone into liquidation publish March 2020 can nonetheless declare towards their insurance policies with CBI extensions.
Nevertheless, ICA tells Moneyweb that the coverage wording stipulates that it’s as much as the insurer to provide a written waiver to shoppers on whether or not they can declare if such companies go into liquidation.