Santam to appeal after losing CBI court case in South Africa
Santam is to appeal against a court ruling that found South Africa’s largest non-life insurer liable to pay a client’s claim relating to a coronavirus lockdown.
Insured hotel group Ma-Afrika successfully argued it was wrong to reject claims made under contingent business interruption policies after they were forced to close, following government lockdowns in the eye of the Covid-19 pandemic.
South African insurers have argued their policies did not cover national lockdowns. However, a court ruled last week that Santam was liable for such a claim made by hotel group Ma-Afrika.
Now Santam is to appeal the judgment at the country’s Supreme Court after discussing the implications of the judgment with stakeholders, including its lead reinsurers. They agreed there was a need to obtain legal certainty from a higher court and it should apply for leave to appeal.
“Santam believes that the high court erred in its judgment,” said the company.
Ma-Afrika and Insurance Claims Africa, a body representing insured parties, said Santam’s decision to appeal the judgment would further delay claims from businesses affected by the Coivd-19 pandemic.
Elna du Toit, chief operating officer of Ma-Afrika Hotels, said: “This will postpone payment of our claims until March/April 2021 at the earliest.”
Santam said following the court decision, which found it liable for the full indemnity period of 18 months, it had increased its provision for claims under the relevant policy by ZAR1.7bn.
Santam said the outcome of the appeal created a high degree of uncertainty around its estimate of the claims, which could end up being significantly higher or lower, meaning it will take time to finalise the financial impact.
It has already paid out ZAR1bn in interim relief payments, meant to tide affected clients over while legal battles play out. These will be deducted from any further payments made.