You are currently viewing our desktop site, do you want to download our app instead?
Moneyweb Android App Moneyweb iOS App Moneyweb Mobile Web App
Join our mailing list to receive top business news every weekday morning.

Ma-Afrika wins court battle against insurance giant Santam

Another blow to short-term insurers trying to wriggle out of honouring Covid-19 business interruption claims.
Ma-Afrika’s Coopmanhuijs Boutique Hotel & Spa in Stellenbosch. Image: Supplied

Update: Santam to appeal Covid-19 ruling

The Western Cape High Court has ruled in favour of Ma-Afrika Hotels and Stellenbosch Kitchen in the high-profile Covid-19 business interruption claims battle against JSE-listed insurance giant Santam.

Moneyweb Insider INSIDERGOLD

Subscribe for full access to all our share and unit trust data tools, our award-winning articles, and support quality journalism in the process.

Choose an option:

R63 per month
R630 per year SAVE R126

You will be redirected to a checkout page.
To view all features and options, click here.

A monthly subscription is charged pro rata, based on the day of purchase. This is non-refundable and includes a R5 once-off sign-up fee.
A yearly subscription is refundable within 14 days of purchase and includes a 365-day membership.

Click here for more information.

In a resounding judgment handed down on Tuesday afternoon, South Africa’s largest short-term insurer was ordered to pay out Ma-Afrika’s pandemic-linked claims for the impact over the entire policy period of 18 months, without limitations. The court also ordered that Santam pay Ma-Afrika’s legal costs.

While Santam is likely to follow industry peer Guardrisk (which is a subsidiary of JSE-listed Momentum Metropolitan Holdings) in appealing a similar ruling by taking its case to the Supreme Court of Appeal (SCA), this latest judgment represents yet another blow to short-term insurers not wanting to pay out such claims.

Read:
Café Chameleon wants business interruption insurance case concluded at SCA
Guardrisk to appeal High Court business interruption insurance judgment
Cape café’s ‘precedent setting’ business interruption insurance victory

“We are grateful for the court’s decision in our favour,” a relieved André Pieterse, chair and CEO of the Ma-Afrika Hotel Group, said on Tuesday night.

He also thanked Ma-Afrika’s legal team, led by Advocate Jeremy Gauntlett QC SC, as well as the support from Insurance Claims Africa (ICA) CEO Ryan Woolley, together with the more than 700 clients the group represents on this issue.

“This outcome will greatly assist in allowing ourselves and others in the [South African] tourism and hospitality sector to weather the ongoing Covid-19 storm,” said Pieterse.

“We are also grateful to Santam for the interim relief payments received in August, which allowed us to retain our entire staff complement of 210 loyal people with more than 1 000 direct dependents. We are hopeful that this decision by the court will terminate the litigation, thereby bringing an end to the insecurity and suffering of many.”

Hot on the heels of Ma-Afrika’s massive court victory, ICA has now called for the immediate resolution and payment of all valid Covid-19 related business interruption claims by insurance companies.

The public loss adjustment firm joined forces with Ma-Afrika Hotels in its litigation against Santam, which has refused to settle the business interruption claims, even though it included cover for infectious or notifiable diseases.

Legal certainty

Woolley noted: “Santam has consistently said that it requires legal certainty in order to honour its customer’s claims, and most other insurers have followed suit.

“In our view, [Tuesday’s] judgment from a full Western Cape High Court bench, provides the legal certainty required to finalise all claims relating to business interruption caused by the pandemic.”

Ryan Woolley, CEO of Insurance Claims Africa. Image: Supplied

He said the seismic impact of Covid-19, coupled with insurers’ unwillingness to honour their obligations to their customers, has deepened the losses of affected businesses with some unable to ever recover.

“We believe it is now time for the insurance sector to step up and display the ethical leadership that has been missing from their response to this crisis thus far,” added Woolley.

ICA pointed out that there have been several legal and regulatory actions in the last few months that have provided additional certainty that insurers are liable for business interruption cover where policies include insurance against infectious and notifiable diseases.

Read:

“In July, the Financial [Sector] Regulatory Authority [FSCA] instructed the insurers to pay claims; also in July, the Western Cape High Court, in the matter of Cafe Chameleon v Guardrisk, rejected the insurers’ argument that the losses suffered by the claimant was due to the lockdown,” ICA noted in its statement.

Guardrisk’s appeal on this case will be heard at the SCA on Monday, November 23. ICA has also now partnered with Cafe Chameleon in this matter.

A matter of ‘national importance’

“The Ma-Afrika judgment has arrived in time to provide the SCA with further guidance from respected Cape High Court judges. This is a matter of national importance and the judgment reiterates the need to protect the consumer from insurers trying to change the terms of the contract post loss,” said Woolley.

“The real question is: are the insurers – which include Old Mutual, Guardrisk, Santam, Bryte, Hollard, F&I, Chubb, TRA, Lombard, AIG and Monitor – truly looking for certainty or simply a way out of their obligations towards their customers?

“We all know that this was a test case, not just for Santam but for all insurers refusing to pay these claims. By settling valid claims expeditiously, they have the opportunity to contribute to the survival of businesses in this critical sector, and to the preservation of thousands of jobs,” stressed Woolley

“Failure to do so will ensure they are remembered in history as companies that contributed directly to the demise of thousands of businesses and jobs during the country’s worst economic and social crisis.”

Santam’s share price took a knock of almost 5% on Wednesday, following news of the High Court loss.

The group said in a statement on Wednesday that it has taken note of the judgment delivered on 17 November related to policies with what it terms Contingent Business Interruption (CBI) extensions.

“The detailed and complex nature of the judgment, as well as its broader implications, means that it needs to be carefully considered. It will also be important for Santam to discuss the implications of the judgment with all our stakeholders, including reinsurers, in order to arrive at a comprehensive response,” it added.

Santam noted that “the issues pertaining to CBI are global in nature” and are also subject to appeal court proceedings in various countries. However, the group made no mention on whether it will appeal the Ma-Afrika High Court decision.

“The response of the global reinsurers, which are in effect insurers to the insurer, is important in helping us to reach finality on this matter… We do understand that all parties need finality as a matter of urgency and therefore remain committed to doing our utmost to ensure that we achieve that as quickly as possible,” it said.

Listen: Nompu Siziba speaks to Insurance Claims Africa CEO Ryan Woolley

AUTHOR PROFILE

COMMENTS   16

Sort by:
  • Oldest first
  • Newest first
  • Top voted

You must be signed in to comment.

SIGN IN SIGN UP

Insurers having to “suck it” is wonderful news. Of course the appeals follow, but the SCA will follow suit with costs – which must happen expeditiously.

This Woolley dude (the ICA bantam cock) is really blowing his mouth off about the insurance companies and their lack of ethics. Not that I disagree with him, but correct me if I’m wrong in remembering how conciliatory and soft his initial statements and approach was in attempting to herd his clients into acceptance of settlements. Now that some folk have stood up and fronted the cost of challenging the insurers he is trumpeting on their ‘skin in the game’. Disgusting!

Fully agree your sdentiments SPAP; pathetic isn’t it that the dude is trying to make a hero of himself at others’ expense.

Paragons of good ethics that these insurers are, look out for huge premium increases on your policies soon. You didn’t think that they’d soak up the pandemic losses themselves, did you?

It may not turn out the way you think. This extension will likely turn into an exclusion and there will be no way to claim for this event in future at any insurer. The premiums necessary to offer such a benefit will be astronomical based upon how long we have been in a “state of emergency”. If this benefit is not removed from policies already it will be removed at policy anniversary.

They will do both. They will remove the coverage, and they will increase your premiums. They’ve never been burdened by bourgeois ethics and will have no qualms at all about increasing your contributions.

@Incitatus I have read the comments on this article and on previous articles about this matter, there seems to be a misunderstanding of how the insurance industry works. The money to pay for these claims will likely not come from any of the South African insurers themselves, but rather from reassurers that grant disaster liability cover. It was important to establish in official court documents when the national disaster was declared so that claims would be calculated from that date onwards.

In my opinion, the courts are biased against Short term insurers as they think Insurers are huge cash conglomerates. This is not true as short term Insurers do scrape the barrel. Life Assurance Companies are in another league.

This may cause some clients to make it, but can have devastating effect on an Insurer and some Insurers may not make it due to this. In addition, the definition of Insurance in short is that the premium of the many, pays for the loss of the Individual ( pooling)and will cause premiums to go up to unaffordable levels in the near future, without which a client cannot survive, should something serious happens in the future- these are the things not thought of by the courts.

Your “opinion” is just that – an opinion. Read the judgement – http://www.saflii.org/za/cases/ZAWCHC/2020/160. Santam’s arguments were ruled to be artificial and illogical. Nothing to do with what courts think of insurers – pure interpretation of what Santam’s own contract stipulates and then logically stress-tested.

totally dis-agree with you.

Andre – Mind numbing! So, an insurer should be allowed to offer a product (cover) that a willing buyer accepts on good faith and then [per your logic] when it doesn’t suit the insurer, they can just renege because they are not ‘huge cash conglomerates’. Then, when the courts force the terms of the contract it becomes the fault of the courts because they (the courts) did not think about the fact that the insurer might struggle???

Don’t u think that the insurers should more carefully think about and game-out scenarios around their cover and what happens if what they say they will be covering actually comes about? Maybe they need some actuarial analysis before they jump.

Also, do you seriously want the common man to believe that the Santam’s of this world are sailing close to the wind financially? Pull another one fella.

“entire policy period of 18 months” can someone please explain the 18 months?

The cover for the loss was limited to 18 months’ losses per incident.

I feel that granting 18 months is a bit beyond the pale. We have not yet experienced 18 months of lockdown. If a company could not trade for 6 months and the client receives payout for those 6 months, the company has not suffered a loss for an additional 12 months. Furthermore, the cases used as a precedence for this decision are being appealed and I think that this decision is not final until the other cases have been finalized.

Is this the same insurance company that uses a yellow umbrella in its logo? Which they remove when it rains?

I am not so happy with the result that went against Santam. We the clients will have to pay for it in the long run. Next year all the short insurances will increase their prices with more than the inflation rate. So don’t be so happy with the result.

I always had great service from Santam who never gave me problems with my claims.

I am beginning to love South Africa more and more every day. The insurance companies always had the goverment to cover there backsides pre 94. But that has changed good. The new South Africa will no longer tolerate the financial industry bullying. This is good news. I read good news everywhere.

End of comments.

LATEST CURRENCIES  

USD / ZAR
GBP / ZAR
EUR / ZAR

Podcasts

NEWSLETTERS WEB APP SHOP PORTFOLIO TOOL TRENDING CPD HUB

Follow us:

Search Articles:Advanced Search
Click a Company: