Hospitality industry ready for 'watershed' court case over Covid-19 insurance

An upcoming court case launched by companies in the hospitality industry against Santam on the payment of business interruption claims will probably provide legal certainty on this issue.

This is the view of Ryan Woolley, CEO of specialist public loss adjustment firm Insurance Claims Africa (ICA).

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

Woolley was speaking ahead of the case - 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 business were affected when the lockdown began at the end of March.

Even though Santam admitted Covid-19 was a notifiable disease and that there were confirmed cases of Covid-19 within 40km of the hotels and the restaurant, the insurer rejected their claims for business interruption.

The case will be heard by the full bench of the Western Cape High Court next Tuesday and ICA has joined hands with the insured.

"We are cognisant of the fact that Santam may appeal, but we hope with this legal certainty, we will be able to treat this as the watershed case that could influence the rest of the industry," said Woolley.

He said time was marching on and the legal process should not drag on forever.

"The longer it drags out, the worse off our claimants are and they have to see how they can survive."  

Woolley said his clients were being decimated, not only by the effects of the pandemic, but also by the insurers not honouring their policies.

"Funding would have helped them survive, would have helped them keep their staff employed. For us, we just hope there is justice for the claimants," he said.

Health economist Prof Alex van den Heever, chair of social security systems administration and management studies at the Wits School of Governance, said reading the wording of the policies, it was difficult to understand under what scenarios that policy was designed to pay out if it was not in an instance like this.

"This I think becomes a real concern because if you don't pay out in this instance, it is very unclear where you would pay out, given the wording of the policy," he said.

Woolley said the lockdown announced by the government affected the hospitality industry the hardest. He said the sector employed 740,000 people and contributed 8.7% of GDP, but found itself devastated by the lockdown, which forced businesses to close down for months.

He said some insurers have decided to make relief payments to some of their clients. He said of its 700 clients, only about 200 had received payments from insurers.

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