Covid-19 business claims: SA Supreme Court of Appeal rules against insurer

A South African court today dismissed insurer Guardrisk's appeal against a previous ruling that found it was liable pay a Cape Town cafe's rejected coronavirus claim.
Like other insurers in South Africa and around the world, Guardrisk, the fourth largest non-life insurer in the country and owned by Momentum Metropolitan, has been battling with clients over its rejection of claims related to the impact of the pandemic on their businesses.
In South Africa, insurers argue that national lockdowns to stem the virus' spread, forcing firms across many industries to shutter for weeks at a time, were not covered under their business interruption policies.
Guardrisk appealed a court decision from earlier this year that said it was liable to pay the claim of one of its clients, Cafe Chameleon, but this was dismissed by South Africa's Supreme Court of Appeal (SCA) today.
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"The central question in this appeal was whether the government's imposition of a lockdown ... was covered by the infectious diseases clause," the written judgment read.
"The question was answered in favour of Cafe Chameleon, as was the question whether the outbreak of Covid-19 in Cape Town was the cause of its business interruption," it continued, dismissing the appeal and ordering Guardrisk to pay costs.
Guardrisk said its legal team was studying the judgment and it would comment further once the team had made its analysis.
The case, one of many underway both locally and around the world, was being closely watched in South Africa.
While it is not seen as having as broad implications as a similar case between the country's largest non-life insurer, Santam, and its clients, the ruling adds to a growing body of local and international legal opinion against insurers' arguments.
‘PRECEDENT SET’
Insurance Claims Africa (ICA), a specialist public loss adjustment firm that has spearheaded the legal fight for many of the businesses with rejected lockdown claims, said there was no need for Santam to appeal Ma-Afrika, as the Guardrisk SCA decision set a precedent for all insurers.
Santam had applied in November to appeal its own business interruption case at the SCA, but ICA believes that the legal certainty the insurer was looking for has been established now, especially since the Guardrisk case was by five SCA judges.
“The time has come for insurers to stop hiding behind their legal teams, and to honour their customers’ claims. We call for immediate resolution of all valid claims. For ten months, companies in the insurance sector have erected one obstacle after another in their determination not to meet their obligations to their customers,” the CEO of ICA, Ryan Woolley, told Fin24.
NAMIBIA
The Namibia Financial Institutions Supervisory Authority (Namfisa) has been silent on insurance claims of businesses devastated by the impact of Covid-19. Major short-term insurance companies too, have preferred not to comment in public about the matter.
Namfisa’s latest stats on the performance of the short-term insurance sector are for the three months before Covid-19 hit Namibia. In the first quarter of 2020, the industry made a profit before taxation of N$42.2 million – a drop of nearly 82% compared to the same three months in 2019. – Own report, Nampa/Reuters and Fin24