Insurance group Santam says it has started the process of assessing claims related to contingent business interruptions due to Covid-19, including those previously rejected in the months after the national lockdown commenced in March.

Business Day notes the claims assessment process will specifically apply to policies affected by recent rulings that insurers are liable for business interruption losses caused by Covid-19 itself, as well as related restrictions imposed by the government, Santam said.

The rulings have confirmed insurers are liable, provided there was an occurrence of Covid-19 within a designated radius of the insured premises. Santam said it had noted an adverse SCA judgment against peer Guardrisk in December, which had confirmed this.

However, the short-term insurer will continue with its appeal to the SCA regarding the indemnity period, or the length of time during which claimants can receive benefits from a policy, with arguments for leave to appeal scheduled for 23 February.

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In a landmark decision in December, the SCA dismissed with costs Guardrisk’s appeal against a ruling that it compensate Cape Town restaurant Café Chameleon for business interruption losses stemming from Covid-19 and the resulting lockdown.

The ruling by Judge Azhar Cachalia dismissed the appeal by Guardrisk – a subsidiary of JSE-listed financial services giant Momentum Metropolitan – with costs, according to a Moneyweb report.

This latest victory for the Cape Town restaurant sets a legal precedent in the ongoing Covid-19 business interruption insurance battles in SA.

The Guardrisk ruling could open the way for billions of rands more in pandemic-related claims against the country’s short-term insurers, which have either paid out interim relief on certain Covid-19 business interruption insurance claims or opted not to pay-out until there is legal certainty on the issue.

It is not clear whether Guardrisk or other short-term insurers that may lose such appeals, will take the matter all the way to the Constitutional Court.

Café Chameleon’s owner Nico Schoeman has pleaded for the case to be finalised at the SCA, reportedly telling Moneyweb previously that the highest court for commercial matters in SA is the SCA.

‘The central question in this appeal was whether the government’s imposition of a lockdown in response to multiple outbreaks of a "notifiable disease" i.e. Covid-19, throughout the country, and predominantly in Cape Town, where Café Chameleon’s operates its business, was covered by the infectious diseases clause,’ Cachalia noted in his concluding remarks on the Guardrisk ruling.

‘The question was answered in favour of Café Chameleon, as was the question whether the outbreak of Covid-19 in Cape Town was the cause of its business interruption,’ he added.

Cachalia pointed out that in coming to this conclusion, his decision was ‘fortified by much of the reasoning’ in the Financial Conduct Authority test case in the UK around similar claims, in addition to the two recent judgments of the Western Cape High Court involving Interfax v Old Mutual.

Judgment

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