A Cape Town court-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.<\/p>\n
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, according to the judgment on Tuesday.<\/p>\n
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.<\/p>\n
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.<\/p>\n
South Africa\u2019s largest short-term insurer Santam, which offered relief for business interruptions to some clients of 1 billion rand ($65 million), has said it will assess whether to pay a dividend upon the resolution of the case. Santam didn\u2019t immediately respond to a request for comment.<\/p>\n
Insurance Claims Africa, the specialist claims-preparing company that worked with Ma-Afrika Hotels and Stellenbosch Kitchen, called on other insurers still blocking claims to pay out customers.<\/p>\n
“We all know that this was a test case, not just for Santam but for all insurers refusing to pay these claims,” Ryan Woolley, ICA chief executive officer, said in an emailed statement.<\/p>\n
“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.”<\/p>\n