The ‘watershed’ legal claim – brought by the Stellenbosch-based hotel group, Ma-Afrika Hotels against major insurer, Santam – will be heard in the Western Cape High Court in Cape Town tomorrow.

This brings to a head months of frustration for hundreds of claimants in the tourism and hospitality sector who have had their business interruption (BI) claims rejected by a number of insurers, despite their holding the requisite policy extensions.

The insurers have been rejecting claims on the basis that the national lockdown forced the sector to close down and they therefore were not liable to pay out on the ‘notifiable disease’ cover. They have been awaiting ‘legal certainty’ on their interpretation of this policy.

Loss adjustment firm, Insurance Claims Africa (ICA) – which currently represents over 700 claimants – believes the position taken by the insurers is “disingenuous” as the national lockdown was implemented by government to contain the spread of COVID-19.

ICA has joined forces with hospitality group Ma-Afrika Hotels in its litigation against Santam.

CEO of ICA, Ryan Woolley, said: “We believe this is a watershed test case in which the judgment will have far-reaching implications across the entire insurance industry. It’s also a critical case for all claimants in the tourism and hospitality sector, for whom the failure of their insurers to pay their legitimate claims has had a devastating impact on their businesses and their employees.”

He pointed out that while it was Ma-Afrika Hotels in court tomorrow, they would be there on behalf of all tourism businesses who bought business interruption insurance. 

“It’s also not only Santam in the dock tomorrow but also a rogue’s gallery of insurance companies that have rejected these claims and are waiting to see what the court decides.”

CEO of Ma-Afrika Hotels, Elna du Toit, pointed out that the company had a business that employed 210 loyal staff and sustained over 1 000 of their direct dependants. Their lives and livelihoods remained Ma-Afrika’s main concern, she added.

“The truth is that Santam and other large insurers in South Africa have lost their moral compass, their credibility and their decency. It’s a travesty that we are having to go to court to fight for what is due to us.

“If there’s one thing that COVID-19 has shown the tourism and hospitality sector, it’s that when it comes to insurers, they will promise you the earth to get your premiums, but will let you down when you need them the most.”  

Woolley said ICA believed the decision taken by the courts tomorrow would be precedent setting and “will reverberate through the insurance industry for years to come”.

Santam Group CEO, Lizé Lambrechts, has continually reiterated that the insurer remained confident in its interpretation of its policy wording relating to BI insurance for the tourism and hospitality sector.