Insurer accused of delaying tactics on payment for business interruption

CapeTown – Insurance Claims Africa (ICA) and Ma-Afrika Hotels have slammed as a “delay tactic” Santam’s appeal against a Western Cape High Court decision that found the insurer liable to pay full Business Interruption losses.

Santam was last week ordered to pay Ma-Afrika over an entire policy period of 18 months without limitations, as well as Ma-Afrika’s legal costs.

On Thursday, Santam wrote to the Supreme Court of Appeal, asking for a postponement in a case involving Cafe Chameleon and Guardrisk, which was set down for hearing today, saying the postponement would allow the Cafe Chameleon and Ma-Afrika appeals to be heard together.

In July, the Financial Services Regulatory Authority (FSCA) instructed insurers Guardrisk to pay claims to Cafe Chameleon.

Both Ma-Afrika Hotels and Cafe Chameleon have formally opposed the insurer’s request.

In a statement, Santam said it believed the high court erred in its judgment regarding causation and the insured peril, the trends clause and the indemnity period, and it was therefore important to take the matter to the SCA.

Santam said the Ma-Afrika judgment referred to both the Café Chameleon vs Guardrisk matter as well as the Financial Conduct Authority (FCA) judgments in the UK – all taken on appeal with decisions expected late in 2020 or early 2021.

“The significance of the Contingent Business Interruption (CBI) matter to the insurance industry and the precedents at stake necessitate continuing to the next stage in the process of obtaining legal finality. (Our lead reinsurers) agree with us on the need to obtain legal certainty from a higher court in this matter,” Santam said.

Ma-Afrika Hotels chief operating officer Elna du Toit said: “This appeal will further delay the final outcome and will again postpone payment of our claims until March/April 2021 at the earliest. By then it would have been more than a year… before we and our employees will have any financial certainty.”

ICA chief executive Ryan Woolley said while they recognised Santam’s efforts to expedite its own appeal, there may be no need for a Santam appeal at all as the Guardrisk SCA decision would set a precedent on its own.

“This is nothing more than a delay tactic that will further cripple tourism and hospitality businesses already hanging on by a thread.

“A delay can only benefit insurer,” said Woolley.

Cape Times