Legalbrief commented on the short-term insurer’s response to the business interruption claims case due to be heard in the Western Cape High Court on 1 September.
“Santam says its clients’ assertion that Covid-19, which forced them to stop operating during the lockdown, is ‘a notifiable disease’ covered by their policies is ‘misguided’. The country’s biggest short-term insurer’s defence rests on the fact that its business interruption policies clearly state that a local authority must stipulate that it’s a notifiable disease, not national government or international bodies, says a Fin24 report. ‘The policy, and specifically the wording relevant to the infectious diseases extension, reveal an intention to provide cover against local events. A global and national pandemic, such as Covid-19, was clearly not contemplated by the policy,’ wrote Santam’s head of hospitality and leisure, Juan Owen Coetzee.”
“The insurer also argued that Stellenbosch Kitchen and Ma-Afrika Hotels’ business interruption were not caused by the two Covid-19 cases that the clients cited as notifiable disease within the 40km radius covered by their policies. According to Coetzee, the fact that by the time SA went on lockdown, the virus was already wreaking havoc in countries like Italy, showed that this could not be confined to the scale of a disease covered by Santam. ‘The overview of the Covid-19 pandemic, how it developed, the consequences thereof and the responses thereto, show that the cause of any interruption to the applicant’s business and loss of revenue was not the two infections in Cape Town and at Tygerberg Hospital but rather the global and national events,’ Coetzee argued.”
“Santam said even if the two cases within the two establishment’s 40km radius had not occurred, a State of Disaster would still have been declared in the country and a lockdown would have occurred anyway.”
It is interesting to compare these arguments with the findings of the Cape High Court in the Café Chameleon case, particularly in terms of the “local authority” aspect. Santam’s wording in respect of its Contingent Business Interruption extension goes even further to require that a “…municipal, regional, local or government authority responsible for the area has declared a notifiable medical condition or communicable disease to exist within the area and/or has imposed quarantine regulations and/or has acted to restrict access to the area in terms of any local, municipal, regional or national law, by-law or regulation pertaining to public health and safety…”
The High Court also found “…a clear nexus between the Covid-19 outbreak and the regulatory regime that caused the interruption of the Applicant’s business.”