The South African High Court has found against Santam, South Africa's largest short-term insurer, and in favor of insureds Ma-Afrika Hotels and Stellenbosch Kitchens, two hospitality companies, in a case over the denial of business interruption insurance during the COVID-19 pandemic and the resulting lockdowns.

The two businesses joined forces with Insurance Claims Africa, (ICA) a public loss adjustment company, against Santam. Since the onset of COVID-19, ICA has been representing hundreds of tourism and hospitality businesses in an attempt to get insurers to pay out business interruption claims.

In a forty-two-page judgment, the Western Cape High Court agreed with the approach of the UK Financial Conduct Authority in settling business-interruption claims resulting from COVID-19 restrictions and found that Santam was liable to pay for business interruption losses related to the lockdown. The Court ordered Santam to pay the hospitality companies for losses over the eighteen-month policy period, as well as legal fees. The judgment cited similar COVID-19 and business interruption cases from around the world, including the U.S. and the U.K.

The Argument

Santam argued that COVID-19 is not a "notifiable disease," a disease that is required by law to be reported to government authorities in order to allow for the collection of information and monitoring of the disease and provide early warning of possible outbreaks.