Santam loses big business interruption insurance appeal case

The Supreme Court of Appeal (SCA) on Thursday dismissed Santam’s appeal and upheld the Western Cape High Court’s landmark Covid-related business interruption insurance judgment in favour of Ma-Afrika Hotels and Stellenbosch Kitchen.

This represents a major final win for the tourism and hospitality businesses, and consequently a big final blow for SA’s biggest short-term insurer and its peers that have been fighting the issue tooth and nail right up to the SCA.

Read more on the case here.

It is unlikely that Santam will take the matter to the Constitutional Court, as this court does not generally deal with commercial matters.

The SCA’s decision means that Santam is obligated to pay Ma-Afrika Hotels and Stellenbosch Kitchen for the full 18-month period of its policies.

“We are most grateful to the honourable judges of the SCA since originally Santam had argued that they had no obligation in terms of the policy,” André Pieterse, chairman and CEO of Ma-Afrika Hotels said in a statement.

“However, following the judgment in the Cape High Court in November 2020, Santam acknowledged their liability, but argued that it was only liable for three-months despite the full bench of the Western Cape High Court having rejected their argument,” he explained.

Santam is yet to react to the decision.

Ryan Woolley, CEO of Insurance Claims Africa (ICA) hailed the SCA decision, saying that “it provides much needed certainty for the finalisation of outstanding claims for businesses in the tourism and hospitality sector, [that have] had to wait more than 18-months for valid claims to be settled.”

He added that the court’s decision in the matter is crucial for thousands of Santam’s hospitality & leisure division’s business interruption policyholders.

“Once the claims are settled by insurers, funds will flow to assist a desperate sector of the economy … We all know that the endless litigation and slow progress on payment of claims by certain insurers has had a devastating impact on businesses in a sector that remains severely challenged by the pandemic, affecting the lives of thousands of employees and their dependents,” noted Woolley.

“The behaviour of insurers throughout this debacle has been a travesty …

“In essence, they chose to abandon their customers in their darkest time of need. This has impacted not only the reputations of short-term insurance companies, but also insurance as an overall category. Their Stalingrad strategy of deny, delay and defend has eroded the public’s trust in insurance and we anticipate that it will take significant effort, commitment and time to restore customers’ faith in the sector,” he reiterated.

Woolley extended his gratitude and congratulations to the entire legal team and to André Pieterse and his colleagues at Ma-Afrika. ICA and Ma-Afrika Hotel’s legal team is led by advocates Jeremy Gauntlett QC SC, Mike van der Nest SC, Sean Rosenberg SC, Guy Elliott SC, and Porchia Long and Jason Mitchell.  They are instructed by attorneys Anel Bestbier of Thomson Wilks, and David Bayliss.