Hospitality association, FEDHASA, said it “finally has hope” that the hospitality sector was close to a “fair and reasonable resolution” to the hundreds of outstanding business interruption (BI) insurance claims.
This follows insurance major Santam’s appearance at the Supreme Court of Appeal (SCA) last week where it asked for leave to appeal on the indemnity period, which legal precedent had set at 18 months. Santam’s contention is that the indemnity period for its policy extension is in fact only three months.
During its court appearance, the insurance major dropped all but one of the targets of its intended appeal on the Ma-Afrika Hotels and Stellenbosch Kitchen ruling to the SCA.
Loss adjustment firm, Insurance Claims Africa (ICA) – which represents over 850 BI insurance claimants in the hospitality sector – highlighted that Santam had made a number of material concessions in its court papers, including dropping its demand that Ma-Afrika’s COVID-19 claim be settled on a three-month ‘take-it-or-leave-it basis’.
This decision by Santam comes after ICA asked the insurer to consider converting its full and final settlement offer to an interim payment of three months, leaving the balance of the 18-month policy to be dealt with after the SCA appeal. Santam has agreed to do this.
FEDHASA national chairperson, Rosemary Anderson, said: “While the time period of the cover continues to be a point of contention, we have come a long way from the days when insurers denied outright they carried any liability.”
She added that FEDHASA was greatly heartened that the insurers had finally accepted their liability and had committed to honour their customers’ claims, but that they were also keen to expedite the appeal process.
“We will be watching the court’s response closely, but we’re certainly much closer to the end than we are the beginning. It’s just so incredibly tragic that the closure of so many hospitality businesses could have been avoided had insurers done the right thing from the start,” said Anderson.
She thanked ICA for doggedly pursuing the fight on behalf of hundreds of hospitality and tourism businesses. “The fact that we have reached a stage where the only issue in contention is now the quantum of the claims based on the different interpretations of indemnity period is a massive positive step.”