Insurance company Santam says it plans to appeal a High Court ruling which found it liable to pay a client’s claim related to the coronavirus lockdown.
The insurer said that the rulings have been taken on appeal with final judgements expected by late 2020 or early in 2021.
“Santam believes that the Western Cape High Court erred in its judgement regarding causation and the insured peril, the trends clause and the indemnity period, and is therefore seeking leave to appeal to a higher court,” it said on Friday (20 November).
“Santam is of the view that its catastrophe reinsurance will limit the net cost of contingent business interruption claims. However, the extent of the reinsurance recoveries will ultimately depend on the response of reinsurers to the outcome of the legal process.”
The Western Cape High Court had ordered Santam to pay out business-interruption claims to two South African hospitality companies, potentially opening up the industry to cover losses suffered because of the coronavirus pandemic.
The court agreed with the approach of the UK Financial Conduct Authority in settling business-interruption claims as a result of Covid-19 restrictions and ordered Santam to pay Ma-Afrika Hotels and Stellenbosch Kitchen for losses for an 18-month period.
The decision comes as another South Africa insurer, Guardrisk, appeals a ruling made against it in a similar matter, and may be used by other insurers in the country to finalize their treatment of virus-related business-interruption claims.
While many local property and casualty insurers rejected claims, saying a global pandemic is not an insurable event, some companies offered relief to clients, and others have entered settlement agreements.