SA hospitality industry welcomes UK ruling declaring insurers liable for Covid-19 business interruption

15 September 2020 - 17:52
Restaurants, B&Bs, hotels, game lodges and other businesses are negatively affected by insurance companies scrapping cover for infectious disease claims in the hospitality industry due to the Covid-19 pandemic and lockdown.
Restaurants, B&Bs, hotels, game lodges and other businesses are negatively affected by insurance companies scrapping cover for infectious disease claims in the hospitality industry due to the Covid-19 pandemic and lockdown.
Image: 123RF/Andrey Bayda

Insurance Claims Africa (ICA) has welcomed a UK high court ruling declaring that insurers are liable for Covid-19 business interruption insurance claims.

 “Today [Tuesday], the UK’s Financial Conduct Authority (FCA) said the court found in favour of the arguments advanced for policyholders on the majority of the key issues,” ICA said.

The FCA had asked the high court for a ruling on how a representative sample of business interruption policy wordings respond to Covid-19 related losses. ICA said it believed the UK ruling was a “positive” development for SA claimants. 

“The UK case was based on business interruption policy wording that is very similar to the policy wording in many SA insurance policies in that it includes cover for notifiable infectious and contagious diseases,” said Ryan Woolley, CEO of ICA.

He said ICA had assisted its affiliated company in the UK with their written brief to the FCA on behalf of policyholders.

Though the UK decision did not set legal precedent in SA, it was a strong and positive new guide in favour of SA claimants, said Woolley.

“From the start we have consistently said these claims should be paid. Our message to SA insurers remains the same as it has been from the outset: talk to us about reaching a swift and sensible settlement for the affected businesses, many of whom face having to retrench large numbers of staff, and for some, even the existential threat of closure,” Woolley said.

ICA is representing more than 700 businesses in the tourism and hospitality sector in their fight to get insurance companies to honour their Covid-19 business interruption claims.

The case was launched by Ma-Afrika Hotels and The Stellenbosch Kitchen, which operate hotels and a restaurant in Cape Town and Stellenbosch respectively, against Santam.

The companies have policies with Santam and their businesses were affected when the lockdown began near the end of March.

According to ICA, since March 2020, when the coronavirus pandemic started, tourism and hospitality businesses of all sizes had suffered “tremendous losses and many have been forced to close their doors, putting thousands of jobs at risk”.

Judgment in the case against Santam was reserved and is expected before mid-November.

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