Times are tough, none more so for businesses battling to stay afloat and save jobs.
As a rule, people pay monthly premiums on medical aid, insurance or other types of cover when all is well, as safety net for the day things fall apart.
To then have to fight for months in court for the right to that safety net is nothing short of disgraceful.
On Thursday, the Supreme Court of Appeal (SCA) ordered insurer Santam to pay Ma-Afrika Hotels and Stellenbosch Kitchen 18 months’ worth of losses.
In November it dismissed Santam’s appeal and upheld a Western Cape High Court finding in favour of Ma-Afrika Hotels and Stellenbosch Kitchen, which should have marked the end of the long battle to hold the insurer liable for Covid-19 business-interruption claims.
Santam and other insurers, which sold business-interruption policies with “contagious diseases” clauses, previously argued that the policy was not intended to cover a pandemic-related national lockdown, nor did the premiums reflect that extent of risk, Sunday Times Daily reported at the time.
But in November three judges ruled that Santam was liable to pay Ma-Afrika Hotels and Stellenbosch Kitchen their full business-interruption losses, including those related to state restrictions. The judgment ordered the insurer to pay the companies for the effect of the pandemic over the entire 18-month policy period, without limitations.
Santam then applied for leave to appeal, saying it believed the court had “erred in its judgment regarding causation and the insured peril, the trends clause and the indemnity period”, and therefore it was “important” to take the matter to the SCA.
Santam Group CEO Lizé Lambrechts made all the right noises on Thursday, saying the insurer recognised the pandemic had a devastating effect on the economy, in particular businesses.
Covid-19 was a once-in-a-lifetime event and Santam therefore had to consult widely on how it would respond to a pandemic, she added.
That the company had already paid more than R2.1bn in claims, including R1bn in interim relief to about 2,500 businesses in August 2020, does not mitigate its responsibility.
The fact is, at a time when businesses should have been rescuing their entities and saving jobs, they were tied up in court with a proverbial begging bowl in hand.
As loss-adjustment group Insurance Claims Africa (ICA) CEO Ryan Woolley said, the judgment affected not just Ma-Afrika Hotels and Stellenbosch Kitchen, but provided much-needed certainty for the finalisation of outstanding claims for tourism and hospitality businesses which have had to wait more than 18 months for valid claims to be settled.
“We all know that the endless litigation and slow progress on payment of claims by certain insurers has had a devastating effect on businesses in a sector that remains severely challenged by the pandemic, affecting the lives of thousands of employees and their dependents.”
He had harsh words for the insurer, accusing it of abandoning customers in their “darkest hour of need”.
In July, ICA, a specialist public loss-adjuster representing about 850 claimants in the tourism and hospitality sector in their battle to get large insurers to pay out on business-interruption claims, commissioned research to assess whether the short-term insurance industry was sufficiently sound financially to afford business-interruption claims.
The report by Dr Roelof Botha, economic adviser to the Optimum Investment Group, and Keith Lockwood, from the Gordon Institute of Business Science, revealed the industry had in fact made record profits since the start of government-imposed lockdowns last March.
In stark contrast, its customers, whose business-interruption claims were contested from the start, are in a desperate battle to survive, with many forced to close.
No more living off the fat of those monthly premiums if you are not prepared to share the bowl at the table was what the court taught Santam.
It is a lesson that should be heeded by companies promising safety nets in troubled times, whether insurance companies or medical aid schemes.
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