Insurers bow to order to pay business claims, but Santam still ‘seeking legal clarity’

In another win for restaurants and accommodation owners, Guardrisk has decided to adhere to the decision of the Supreme Court of Appeal (SCA) in favour of Cafe Chameleon, one of the establishments that took it to court for failing to pay out its business interruption insurance claim.

Guardrisk appealed the decision of the Western Cape division of the High Court that it must pay Cafe Chameleon’s claim, but the SCA dismissed the appeal and ordered Guardrisk to settle Cafe Chameleon’s full claim and legal costs.

According to the judgment, the infectious disease clause did indeed cover government’s imposition of a lockdown in response to multiple outbreaks of a “notifiable disease”, Covid-19, throughout the country and predominantly in Cape Town where Cafe Chameleon operates.

This judgment now sets precedent for all other claims for business interruption insurance heard in lower courts across the country, as well as Santam’s appeal against a similar ruling in the Ma-Afrika case.

ALSO READ: Court orders insurance giants Santam to pay business claims

Payouts welcomed

Specialist public loss adjuster, Insurance Claims Africa (ICA), said in a statement that it welcomed Guardrisk and Hollard’s commitment to honour their customers’ business interruption claims, but warned that the next battle would be about the amounts of these claims.

“While we are encouraged by Guardrisk’s commitment to fulfilling its contractual obligation with its clients, we are aware that they are reluctant payers and are likely to be aggressive in their determination of the amounts. In this next crucial step in the process, we are determined to ensure our clients see justice done and receive the fair compensation due to them,” says Ryan Woolley, chief executive officer of ICA.

ALSO READ: Appeal court rules – insurer Guardrisk has to pay Café Chameleon’s full claim

Guardrisk wrote to clients confirming it accepted the SCA ruling and would abide by it. According to ICA, Hollard will also abide by ruling. Hollard said it will start processing claims against policies that contain cover similar to the cover Cafe Chameleon had.

Santam still arguing

Santam, however, has refused to accept the outcome and is arguing that the cases differ materially, despite its earlier position when it asked to join the Cafe Chameleon appeal, when Santam wrote that “while there are small differences in the policy wordings in both matters, the issues being dealt with are very similar”.

ALSO READ: Santam reacts to appeal Court Cafe Chameleon – Guardrisk judgment

Woolley said the ICA was dismayed by Santam’s Stalingrad approach to this matter, as the insurance giant continued to delay and deflect from their clear obligation to pay out their clients’ claims. “Santam’s repeated refrain that it is seeking legal certainty is clearly hollow, when you consider that eight high court judges and five SCA judges unambiguously found these claims to be legitimate and ordered insurers to pay out claims.”

He added that, as South Africa faced a second wave of the pandemic, hope of survival was fast evaporating for many of these businesses that were counting on the summer holidays to carry them through to 2021. “Santam’s delays are causing its customers profound and irreversible harm, as they continue to slide deeper into economic ruin.”

The insurers who paid without a fight

Although some insurers were taken to court because they refused to pay out business interruption claims, some insurers did what they were supposed to do: they assessed the claims and paid out.

ALSO READ: Plea from restaurant industry to insurers: stop the nightmare before Christmas

Alex Terblanché, head of business insurance at Auto & General Insurance, said firm honoured all valid business interruption claims from clients who were affected by loss of income caused by the national lockdown and whose business interruption cover was taken out before the onset of the national lockdown.

“Our clients were insured through Auto & Guest, a specialist hospitality product. Auto & Guest covers contagious diseases with no kilometre radius restriction or need to prove a Covid-19 case in close proximity of the business premises. We also made interim payments to assist clients while we were finalising their claims.”

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