Santam ‘pleased’ with SCA ruling on business interruption claims

Santam has accepted the Supreme Court of Appeal’s (SCA’s) decision about business interruption, saying it is “pleased” that the judgment has brought legal clarity and finality on the interpretation and application of certain contingent business interruption policies.

The giant insurer will now pay all the outstanding claims.

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“We recognise that Covid-19 has had a devastating effect on the economy and particularly on businesses. We also understand that our clients were affected by the process of attaining legal certainty on this one remaining business interruption matter,” Lizé Lambrechts, CEO of Santam Group, says.

The SCA ruled that the longer 18-month indemnity period referred to in the main business interruption section of Ma-Afrika’s policy, which deals with physical damage, also applies to the contagious and infectious diseases extension of the contract, which Santam argued was three months.

Lambrechts says the judgment affects less than a third of the 3,200 business interruption claims and specifically some policyholders in the hospitality and leisure division of Santam.

She says the insurer has already made considerable progress in processing these claims and has so far paid out more than R2.1 billion, including more than R1.1 billion since January 2021.

“Covid-19 was a once-in-a-lifetime event that affected the entire population and economy which also raised key challenges for non-life insurers, regulators, intermediaries and reinsurers globally. We therefore had to consult widely on how our policies would respond to a pandemic,” she said.

Santam has already put measures in place to ensure that the wording of its business interruption policies is as clear as possible to avoid uncertainty about cover.