Santam share price falls after landmark ruling orders insurer to pay up for Covid-19

By Roxanne Henderson

(Bloomberg) — A Cape Town court ordered Santam Ltd. to pay out business-interruption claims to two South African hospitality companies, potentially opening up the industry to cover losses suffered because of the coronavirus pandemic.

The court agreed with the approach of the U.K. Financial Conduct Authority in settling business-interruption claims as a result of Covid-19 restrictions and ordered Santam to pay Ma-Afrika Hotels and Stellenbosch Kitchen for losses for an 18-month period, according to the judgment on Tuesday.

The decision comes as another South Africa insurer, Guardrisk, appeals a ruling made against it in a similar matter, and may be used by other insurers in the country to finalize their treatment of virus-related business-interruption claims. While many local property and casualty insurers rejected claims, saying a global pandemic is not an insurable event, some companies offered relief to clients and others have entered settlement agreements.

South Africa’s largest short-term insurer Santam, which offered relief for business interruptions to some clients of 1 billion rand ($65 million), has said it will assess whether to pay a dividend upon the resolution of the case. Santam didn’t immediately respond to a request for comment.

Insurance Claims Africa, the specialist claims-preparing company that worked with Ma-Afrika Hotels and Stellenbosch Kitchen, called on other insurers still blocking claims to pay out customers.

“We all know that this was a test case, not just for Santam but for all insurers refusing to pay these claims,” Ryan Woolley, ICA chief executive officer, said in an emailed statement. “By settling valid claims expeditiously, they have the opportunity to contribute to the survival of businesses in this critical sector, and to the preservation of thousands of jobs.”

Shares in Santam declined 1.8% by 9:07 a.m. in Johannesburg.

(Visited 557 times, 10 visits today)