South African Insurer Santam to Appeal COVID-19 Business Interruption Ruling

November 20, 2020

Santam said on Friday it would appeal against a court ruling that found South Africa’s largest non-life insurer liable to pay a client’s claim relating to a coronavirus lockdown.

Like insurers in other countries, Santam has been battling with clients who say it was wrong to reject claims made under business interruption policies after they were forced to close.


South African Insurer Santam Loses COVID-19 Business Interruption Test Case

South African insurers say that their policies did not cover national lockdowns. However, in a closely-watched case, a court ruled on Tuesday that Santam was liable for such a claim made by hotel group Ma-Afrika.

Santam said after discussing the implications of the judgment with stakeholders, namely its lead reinsurers, it had decided there was a need to obtain legal certainty from a higher court and it should apply for leave to appeal.

“Santam believes that the high court erred in its judgment,” it said in a statement.

Ma-Afrika and Insurance Claims Africa, a body representing insured parties, said in a statement that Santam’s decision to appeal the judgment would further delay claims from businesses affected by the COIVD-19 pandemic.

This will “postpone payment of our claims until March/April 2021 at the earliest,” Elna du Toit, Chief Operating Officer of Ma-Afrika Hotels said, adding the delay would cripple the already suffering hospitality industry in South Africa.

In a separate statement, Santam said following the court decision, which found it liable for the full indemnity period of 18 months, it had increased its provision for claims under the relevant policy by 1.7 billion rand ($111 million).

Santam said the outcome of the appeal created a high degree of uncertainty around its estimate of the claims, which could end up being significantly higher or lower, meaning it will take time to finalize the financial impact.

It has already paid out 1 billion rand in interim relief, payments meant to tide affected clients over while legal battles play out. These will be deducted from any further payments made.

Santam shares closed down 2.59%, underperforming the broader index, which was down 0.24%.

($1 = 15.3715 rand) (Reporting by Emma Rumney; editing by Jason Neely and Alexander Smith)

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