Following the Cape High Court finding that Santam was liable to pay qualifying policyholders under the Business Interruption clause related to contagious diseases, the biggest insurer indicated on Friday that it would appeal against this decision. This despite a full bench of the court not only ruling against it, but also awarding costs against the insurer.
In previous media releases, Santam stressed the importance of obtaining legal “clarity”. It now indicates that it requires legal “finality”. Whether this will mean acceptance of the Appeal Court findings remains to be seen, as the reinsurers indicated that they need “certainty”.
There can be little doubt that reinsurers play a significant role in this saga. Professor Robert Vivian is quoted in City Press as saying that it was improbable that reinsurers would have foreseen the likelihood of having to foot Covid-19 related claims internationally, as this could impact severely on their reserves.
Meanwhile, Liesl Peyper notes in Rapport that Santam and Guardrisk have jointly applied to the Appeal Court that the Café Chameleon case, scheduled for today, be postponed and joined with the Santam case. This will effectively mean that long-suffering policyholders (since March 2020) will have to wait even longer for legal certainty/clarity.
This request may be slightly premature, as Santam still has to approach the court for permission to appeal. We will update this information on Thursday.
The main bone of contention is whether the government lockdown, which stemmed from the outbreak of Covid-19, can be construed as the causal event which triggered business interruption. The Rapport article cites legal findings in the UK, USA, Germany, Canada, the Netherlands, Australia and New Zealand who found against the insurers in this regard.
The ruling by the court that the actual indemnity period of Business Interruption should be 18 months, instead of the three that Santam understood from their policy wording can have a substantial bearing on the final amount payable under these claims. Understandably, this is something Santam will contest in its appeal., despite substantial savings in terms of reduced claims during the lockdown.
As we wrote on Thursday, Judge Cloete noted:
“…it is the insurer’s duty to spell out clearly the specific risks it wishes to exclude. In the case of “real ambiguity” the contra proferentem rule applies, and such a clause is construed against the insurer;…”
Peyper also notes that Professor Birgit Kuschke, a specialist in insurance law, found it disturbing that Santam, in its pleadings, argued that the media releases of the Financial Sector Conduct Authority were “irrelevant and unfounded”, and should be discarded.
There is obviously much at stake here, and while we wait for the fat lady to sing, policyholders are in dire straits as they try to keep their heads above turbulent waters.
In the interim, Guardrisk lost another lockdown claim, this time against Cape Town restaurant, Fat Cactus Café. Click here to read more.