Over 850 tourism and hospitality businesses, represented by loss-adjustment firm, Insurance Claims Africa (ICA), are optimistic that yesterday’s precedent-setting Western Cape High Court ruling in favour of Ma-Afrika Hotels and Stellenbosch Kitchen against Santam will spur other insurers to finally pay up to R7 billion (€383,47m) in outstanding business interruption insurance claims.
In what ICA CEO, Ryan Woolley, hailed as a resounding victory for tourism and hospitality businesses, the High Court ruled that Santam was liable to pay the full BI losses, including the impact of the government’s response to COVID-19 (i.e. lockdown losses).
The November 17 judgement ordered the insurer to pay Ma-Afrika 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.
“This precedent-setting case is likely to positively impact the Café Chameleon cases against Guardrisk, which will be heard at the Supreme Court of Appeal on Monday, November 23,” said Woolley during a press briefing today (November 18).
ICA has joined forces with the popular Cape Town restaurant as Guardrisk appealed an earlier Western Cape High Court judgement that found in favour of Café Chameleon, ruling that the insurance company should pay the BI claims.
Woolley said he expected the judgement ruling to be announced before January 15 next year. “With Ma-Afrika winning its case yesterday, we are confident of the outcome of the appeal in favour of the restaurant.”
He added, however, that the battle against the insurance companies was far from over and that he expected Santam to appeal yesterday’s judgement as well. “We only hope they act swiftly in this matter and do not drag the case out further.”
‘Industry teetering on the brink of disaster’
Woolley said some insurers might even take their cases to the Constitutional Court. “But they should be aware that they have already suffered reputational damage as they continued to stall in paying out claims while a number of tourism and hospitality businesses faced temporary or permanent closure.
“Due to business interruption caused by the COVID-19 pandemic and the subsequent lockdown, the industry is teetering on the brink of disaster and bleeding much-needed jobs and community assistance.”
Woolley pointed to a private lodge in the Waterberg region in Limpopo as one of the newest casualties. He said it offered employment to over 100 people in the area and had had several strong community upliftment projects running for over a decade.
“They have indicated that if their claims are not settled soon, they may have to close.”
‘Insurers may break ranks and pay claims’
Following the judgement, ICA is working with all the BI insurance companies and Woolley believes some may break ranks with their counterparts and look at settling claims rather than continue a long, protracted legal battle.