INSURANCE IN COVID-19 ERA: Santam pays out, but the legal battle continues

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INSURANCE IN COVID-19 ERA: Santam pays out, but the legal battle continues
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Just as water damage is a justifiable consequence of putting out a fire, so the lockdown is a consequence of stemming a pandemic and cannot be separated from the event. This principle will soon be debated in court. Meantime Santam and other insurers have made good on their promise to provide some interim relief to clients.

Santam, South Africa’s largest short-term insurer, has paid out R506-million of the R1-billion it allocated for urgent relief to policyholders in the hospitality, leisure and non-essential retail services industries who have a Contingent Business Interruption extension in their policy cover.

This is underpinned by the industry’s largely European-based reinsurers who will not honour their obligations to their insurance clients without a court-sanctioned decision. Their businesses have been brought to a standstill due to Covid-19 and the government’s response to this pandemic. Their hotels are closed and restaurants are barely operating.

Ma-Afrika and its legal team argue that just as a firefighter has to cut through the roof of a house to reach the fire inside it or flood the house to put the fire out, so a government may need to put the country in lockdown in response to a notifiable disease.

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