Picture: SANTAM
Picture: SANTAM

SA’s largest short-term insurer Santam says it will appeal a Western Cape High Court finding that it is fully liable for all losses suffered by some of its clients during the Covid-19 pandemic.

The ruling could put insurers on the line for hefty payouts, and Santam was seeking to limit its payout period for continued business interruptions claims to three months, while the court ruled it is liable for 18 months.

As a result of the judgment, Santam said it has raised its continuing business claim provisions by a further R1.7bn, which is in addition to the R1.3bn it raised for its six months to end-June.

The matter is complex, however, and Santam said it will take some time to finalise the extent of its exposure.

Santam said in a statement that it believes the Western Cape High Court erred in its judgment regarding causation and the insured peril, and the term of indemnity, and is therefore seeking leave to appeal to a higher court.

“Santam is of the view that its catastrophe reinsurance will limit the net cost of contingent business interruption claims,” the insurer said in a statement. “However, the extent of the reinsurance recoveries will ultimately depend on the response of reinsurers to the outcome of the legal process.”  

Santam said its reinsurers — referring to companies that provide financial protection to insurers from major claim events — are “key stakeholders in the insurance value chain as they are, in effect, insurers to the insurer”.

“They agree with us on the need to obtain legal certainty from a higher court in this matter,” the statement read.

Hotel group Ma-Afrika Hotels, along with loss-adjustment group Insurance Claims Africa (ICA) and Stellenbosch Kitchen, are seeking about R122.4m through five policies, part of global legal battles over to what extent insurers are liable for Covid-19 restrictions on business activity.

A similar case, involving Momentum Metropolitan Insurance’s short-term subsidiary Guardrisk, is due to be heard in the Supreme Court of Appeal on Monday.

gernetzkyk@businesslive.co.za

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