Tag: Santam

Santam loses Covid court battle

Source: Reuters

A South African court on Tuesday ruled that insurer Santam should pay coronavirus-related claims made by hotel group Ma-Afrika, which it had rejected, according to a written judgement.

Globally, firms like Ma-Afrika, forced to close under coronavirus restrictions, have been fighting the rejection of claims made under business interruption policies. In South Africa, insurers say these policies did not apply to government lockdowns.

Tuesday’s judgement however, following a case brought by the small hotel group and a related restaurant, ordered Santam to pay out on the group’s claims made under an extension of its business interruption policy.

“The applicants have established that they have an existing contractual right to indemnity under the infectious diseases clause to the policies,” the judgement stated.

The judgement said the combined total of business interruption cover for loss of revenue under four policies held by Ma-Afrika’s hotels, and another policy held by the restaurant, stood at 122.43 million rand ($7.94 million).

A spokeswoman for Santam, the country’s largest non-life insurer that has previously indicated it will appeal any decision against it, said the insurer would comment on the news on Wednesday morning.

Other insurers, under pressure from regulators and with their reputations bruised by the dispute, have also been watching the case. It is seen as providing some legal certainty around their obligations in relation to the policies.

Ryan Woolley, CEO of Insurance Claims Africa, a loss adjuster representing over 750 affected firms in South Africa including Ma-Afrika, said the case provided the certainty required to finalise all such disputed claims.

“We believe it is now time for the sector to step up and display the ethical leadership that has been missing from their response to this crisis thus far,” he said in a statement.

Andre Pieterse, chairman and CEO of Ma-Afrika, said the decision would greatly assist his firm and others in his sector to weather the pandemic, and he hoped it bought an end to the litigation.

He also thanked Santam for a payment received under a 1 billion rand initiative the insurer offered to affected clients. The payments were interim relief intended to tide them over while legal battles played out.

 

By Jarita Kassen for EWN SANTAM PAYS OVER R500M IN BUSINESS INTERRUPTION INSURANCE PAYMENTS

More business interruption insurance clients have now received some form of relief.

The country’s largest short-term insurer, Santam, has finally paid out over R500 million in relief payments months after claims were lodged by policyholders hard hit by the COVID-19 lockdown.

The business interruption claims were initially rejected with Santam and other insurers reluctant to honour the policies because in their view the damage was caused by government’s lockdown and not the actual pandemic.

Following an agreement with regulators in July, Santam committed to paying out up to R1 billion in relief to some business interruption clients.

The financial services company had so far made relief payments to over 1,300 policyholders who had contingent business interruption cover.

Many of these policyholders were small and medium businesses operating in the tourism and hospitality sectors severely affected by the pandemic.

Santam said the average time between receiving the necessary documentation and payment was less than five days.

These relief payments were set at a minimum of R25,000 and a maximum of R1.5 million.

“Relief payments are set at a minimum of R25,000 and a maximum of R1.5m for individual contingent business interruption (CBI) policyholders. Santam has made it clear that it will not make the process of claiming the relief too onerous for its qualifying clients and will rather focus on swift payment of the relief to the most impacted industries,” Santam CEO Lizé Lambrechts said in a statement.

It is an interim measure, while insurers sought legal certainty in court.

Another insurer, Guardrisk, took a different route and was settling valid business interruption claims as a result of the coronavirus pandemic.

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