Loss adjustment firm, Insurance Claims Africa (ICA) – which represents over 750 business interruption insurance claimants in the tourism and hospitality sector – has called for the immediate resolution and payment of all valid business interruption claims by insurance companies.
This follows the landmark judgement handed down by the Western Cape High Court on Tuesday (November 17) in favour of Ma-Afrika Hotels and Stellenbosch Kitchen against Santam.
ICA joined forces with hospitality group Ma-Afrika Hotels in its litigation against its insurer Santam, who has refused to settle its valid business interruption claims, even though they included cover for infectious or notifiable diseases.
Santam, along with several other insurance companies, has continuously maintained confidence in its interpretation of its policy wording relating to BI insurance for the tourism and hospitality sector.
Santam Group CEO, Lizé Lambrechts, and CEO of Hollard’s short-term business unit, Willie Lategan, have both been staunch in their belief that nationwide government closures or lockdowns were not insurable risks.
Both companies have said they were awaiting legal certainty before paying out BI insurance claims worth billions of rands. Tourism Update has extensively reported on general losses to the industry as well as specific cases where tourism businesses were struggling to survive while the major insurers stalled on pay-outs.
Today (November 17), the court found in favour of Ma-Afrika, stating that Santam was liable to pay the full business interruption losses, including the impact of the government’s response to COVID-19 (i.e. lockdown losses). The 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 Santam to pay Ma-Afrika’s legal costs.
Chairman and CEO of the Ma-Afrika Hotel Group, André Pieterse, said in response to the judgement: "We are grateful for the court's decision in our favour. This outcome will greatly assist in allowing ourselves and others in the tourism and hospitality sector to weather the ongoing COVID-19 storm.”
Ryan Woolley, CEO of ICA, added: “In our view, today’s judgment provides the legal certainty required to finalise all claims relating to business interruption caused by the pandemic. The seismic impact of COVID-19, coupled with insurers’ unwillingness to honour their obligations to their customers, has deepened these businesses’ losses, with some unable to ever recover. We believe it is now time for the insurance sector to step up and display the ethical leadership that has been missing from their response to this crisis thus far.”
The tourism and hospitality sector sustains over 740 000 direct and 1.5 million indirect jobs, and contributes 8.6% to the South African economy. It is also the lifeblood for many micro and small enterprises creating mass employment opportunities for men, women and youth across the country.