Santam loses big business interruption insurance appeal case

Court dismisses appeal with costs in big win for Ma-Afrika Hotels and Stellenbosch Kitchen, while insurer concedes defeat saying it accepts the decision.
Image: Moneyweb

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.

Ma-Afrika Hotels, André Pieterse, Insurance Claims Africa, Santam, business interruption insurance

Ma-Afrika’s Coopmanhuijs Boutique Hotel & Spa in Stellenbosch. Image: Supplied

“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.

Read: Ma-Afrika wins court battle against insurance giant Santam

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.

Read: Santam fails to get Guardrisk’s Café Chameleon appeal postponed

“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.

Read: Café Chameleon wants business interruption insurance case concluded at SCA

Woolley extended his gratitude and congratulations to the entire legal team and to Pieterse and his colleagues at Ma-Afrika Hotels.

Santam said in a statement, issued on Thursday afternoon, that it accepts the SCA decision, and it aims to finalise such claims as quickly as possible.

“Santam is pleased that a judgment handed down today by the SCA has brought legal clarity and finality on the interpretation and application of certain contingent business interruption (CBI) policies,” the group added.

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

Read: Santam ‘making headway’ in settling business interruption claims

“We are however very pleased that this judgment allows us to proceed to finalise all impacted CBI claims as soon as possible in-line with the ruling of the SCA,” she added.

Santam pointed out that the judgment affects less than a third of the 3 200 notified CBI claims, specifically some policyholders in its hospitality & leisure division.

“The insurer has already made significant progress in processing CBI claims and has so far paid more than R2.1 billion, including more than R1.1 billion since January 2021,” the group said.

“Today’s judgment provides the clarity and certainty we and our clients have been looking for. At the same time, we will take positive lessons from the process,” declared Lambrechts.

Lizé Lambrechts, Santam, Santam loses, Business interruption insurance, Covid-19, Ma-Afrika Hotels, Insurance claims africa

Lizé Lambrechts, outgoing Group CEO of Santam, SA’s largest short-term insurer. Image: Supplied

She noted that 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,” Lambrechts said.

“Getting legal clarity in the face of uncertainty about some policies was essential so that Santam could respond to and balance the interests of the full spectrum of clients and other stakeholders,” she added.

Meanwhile, Santam said that it 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.

Santam’s share price was not affected by the SCA decision on Thursday. In fact, the stock was trading  marginally up at around R258 a share.



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Good news for all insured. I hope thete were punative damages awarded.

Santam’s “defence” was absurd, much like trying to pretend it’s not the collision that damaged your car, but the sudden stop. So I’m happy for the tourism industry and about the lesson this dodgy industry was taught today. Not that they will change their crooked ways.

Also, I’m under no illusion that these shysters will carry the costs themselves. All of us, their policy holders, will be made to pay for this defeat by means of higher premiums.

The court is 100% right, justice prevails, thank you and start paying.

What changed my mind completely about this insurer , and to me this was everything I needed to know, as it was so shocking, was when they asked that the group of people and companies not go to court as one body with the same lawyers but rather each individually go to court.

Does this make sense to have a 1000 court cases or one? very inefficient , super expensive and laborious.

Did they really expect a struggling businesses to be able to hire good lawyers individually?

So pleasing to see a bit of coming around from what has been going around for a long long time.

In 2012 my business was beset by a string of misfortunes that resulted in a situation with this self same scheme of insurance.

First up our service and maintenance vehicle was bump-and-runned in the parking lot of a shopping centre in Kempton while our technician was busy servicing a client on a call out.

Shortly thereafter, our delivery vehicle was back ended by a taxi and written off whilst returning from a delivery in 4 Ways.

I had opened a group insurance policy with the “umbrella” insurers via a broker near Melrose Arch about 10 years previously.

They paid out the write off then sent me a letter saying that as the amounts they had paid out over the past 4 years exceeded the amounts they had received, they were cancelling the insurance policy.

This despite the fact the policy had been in effect for nearly 10 years!

They also conveniently (for them) failed to pay out for the repairs to the service bakkie, which claim had been submitted before the write-off.

I spent nearly two years back and forward with the ombudsman, who recovered around R35k for the necessary repairs for us.

However, ever since- try what I may, almost every insurance company in the country point blank refuses to give us group cover… the gross prejudice of these inside-connected if not inbred networks is startling.

Really is a racket run by what seem gangsters and thugs- more likely to add to your woes and slit your throat when you are most vulnerable than provide any morsel of relief they have already been paid for.

Lesson learned- self-insure via basic policies like unit trusts, ETF’s and 3rd party Fire & Theft.

The only time you really need insurance is when you have just left school and are starting your first job or headed to tech/ varsity and have no savings aand little income.

You need enough cover to get you to the point your first investment vehicle is worth the replacement value of the vehicle you drive. Oh, and your best insurance is to drive only when absolutely necessary, stay sober and safe, and don’t let other people drive your car- that should go without saying, no?

Then kick the insurance can down the road and stay on top of your savings and investments bud.

Don’t overfeed the hostile dog eat dog malaise that is called the insurance industry, it is incurable and terminal.

Very good news. I trust that the paying consumer in S A will note that the offending Insurance Companies did not act with the utmost good faith as is required by law and boycott them accordingly. That is what they deserve and what I would do if they were my insurer.

LEKKER!! Pay the insured !!


They should also be compensating those claimants for losses caused by the delay in payment as a result of this spurious and evasive behaviour by Santam.

SANTAM – i hope you lose all your clients and get liquidated. Finally, some justice against big corps.

Medical Aids and Banks – you next.

Well Karma …after a being loyal with Santam for 13 years and they screwed me over in lock down. Seems Karma found you big time.

One wonders if Santam has insured itself against “loss of business” during this pandemic. It is now losing business hand over fist.

Wow, I’m pleasantly surprised. Excellent precedent case going forward.

I worked in the insurance industry for 37 years and was consulted by the attorneys of one of the insurers on whether they should pay. I said if the insured had the infectious diseases extension under the Business Interruption section then in my opinion it was covered up to the insured amount of that extension. The insurer and the attorneys ignored my advice and lost their original court case.

The current appeal ruling is something different and in my opinion is incorrect and sets a very dangerous precedent if left unchallenged (to the detriment of the insuring public and investors). The facts are the policy contract did offer the cover BUT legally limited the amount payable for this extension. To ignore the contract and to force a payment beyond what is contractually and legally due is extremely dangerous (and that is what has happened here).

One must remember that the amount available to pay claims is obtained from the premiums charged to all policyholders. If the courts and the Insurance Ombudsman start awarding claims payments beyond the contract limits or cover (as is what has happened here and the amounts are massive and not catered for in the original premiums paid) then this is going to have two negative impacts:

1. All policyholders are going to experience substantially increased premiums to fund all of these claims that should not have been paid (and any other future claims that are not covered if insurers cannot contractually limit certain amounts).
2. Shareholders will (or should) withdraw their investments in these companies as this adds an unquantifiable additional risk.

It makes my blood boil however whenever I come across an insurer that does not pay a valid claim (or tries to avoid paying a claim that should be paid). This not only hurts the poor policyholder who should be paid but also harms the reputation of the insurance industry.

By the same token we cannot permit what is happening here.

As much as insurance is a grudge purchase and people love having a go at insurers (and sometimes this is warranted), the reality is that in excess of 99% of all claims are settled fairly and do result in a happy outcome (of course one only hears of the unhappy clients and although a small minority – through the media and social media they enjoy massive exposure).

So Sanlam/Santam both decent short trades..Serious are you…??

Maybe a look in the mirror would show up your hypocrisy. The 99% of claims paid are because the premiums ensured financial cream for the insurer and the event insured was well known and understood. Now comes covid; by surprise to the bloated dozers in insurance and add ANC regime boneheaded stupidity that extended financial losses and insurers are caught with their pants down and whining.

As to your premium waffle; let’s see the numbers. I doubt it is an overall premium deficit situation (covered by reinsurance anyway; if the insurers were prudent and not greedy). Probably only for business interruption and even then I am sceptical.

But one thing is sure; it will be used as an excuse to raise premiums.

Enjoy your retirement but think about who paid for it. A hint, it wasn’t really the insurance company but the policy holders.

Insurance Companies are basically a licence to fleece people.

They use fear as a principal weapon – that bad things will always happen to you but they are perfectly happy to take on the same bad things as “risks”, that you so dearly fear.

And profit from your fear,

and when a misfortunate event does arise – they look for every excuse NOT to pay, using their lawyers to intimidate and harass you, with their legal nonsense hoping that it will be to costly for a single individual to litigate – so they always get away with it.

Not this time.

Well done guys for staying the course and beating them.

Ms Lembrechts – its an utter disgrace on your path.

Convid-1984 had little to no effect on businesses. The totalitarian government and health department regulations closed the doors of the businesses. Santam should take the scientist’s and politicians, who disregarded standard operating procedures with regards to a pandemic,to court and have them prove that lockdowns were beneficial to RSA. There are enough examples around the world that the lockdowns cause nothing but harm. Santam and the court must hold those responsible personally liable for this catastrophe they brought on our country.

End of comments.




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