Santam to settle valid Covid claims

Santam Namibia yesterday said it would settle valid claims for all commercial policies with contingent business interruption (CBI) extensions that were affected by the Covid-19 lockdown last year.

Local confirmation from the chief executive officer of Santam Namibia, Franco Feris, followed an announcement yesterday morning by Santam Limited on the Namibian Stock Exchange (NSX) that claims for all commercial policies with CBI extensions would be assessed and processed in addition to those covered by its hospitality and leisure division. Santam Limited, listed on the JSE in South Africa, has a secondary listing on the Overall Index of the NSX.

Santam made the decision to start assessing and processing the claims from all commercial policies with CBI extensions after analysis and consideration of recent court judgments in South Africa and the United Kingdom, Feris said.

To date, no CBI claims have been settled. “While the process of establishing legal certainty may have felt lengthy, it was completed as expeditiously as possible in the interests of clarity for clients, insurers and reinsurers,” Feris said.

He added: “The unprecedented circumstances of the pandemic made it critical to go through this process to conclusively address the uncertainties we all faced.”



'Pleased'

Feris said Santam was “pleased that the core issue of establishing what is covered in the policies has been dealt with sufficiently by courts in South Africa, the UK and elsewhere for us to move ahead with the claims assessment and settlement process”.

This level of legal certainty will enable Santam Namibia to proceed with the assessment and settlement of all valid CBI claims “as quickly as possible”, according to Feris.

The assessment process for CBI claims requires that businesses provide financial statements and other necessary documentation to support their claims.

“Clients are urged to work closely with their intermediaries to ensure that the requirements for processing claims are met,” he said.

Santam will continue to keep intermediaries and clients updated on the progress of assessing and processing their claims, he added.



'Acutely conscious'

The CEO said Santam Namibia “has been acutely conscious throughout the process of establishing legal certainty that clients were under exceptional pressure because of the impact of Covid-19 and the associated measures taken by the government to deal with the pandemic”.

“It is for that reason that in Namibia, Santam [by August 2020] paid interim relief of N$20.4 million to policyholders operating small and medium businesses impacted by the lockdown and a further N$9.4 million to provide premium reductions, premium refunds, support to SMMEs in the industry and corporate social responsibility,” Feris said.

Interim relief payments that were made will be considered an advance payment against any finally determined claims against Santam under the CBI extension.

“From a Santam perspective, this approach is a demonstration of the company's brand promise of Insurance Good and Proper,” Feris said.

According to Santam Limited, yesterday's announcement covers the total base of the group's 4 000 commercial clients with CBI policy extensions that cover contagious and infectious diseases.

Santam earlier this month said it would commence the process of assessing and processing claims for policies with CBI extensions in its hospitality and leisure division that had been specifically affected by recent court judgments in South Africa. The move impacted 1 300 clients in this division.



Ma-afrika judgment

Santam released an announcement on the NSX on 4 January saying the claims assessment process would specifically apply to policies impacted by the recent judgment in the Western Cape High Court in the case between the group and Ma-Afrika Hotels (Pty) Ltd and Stellenbosch Kitchen (Pty) Ltd, and the judgment of the Supreme Court of Appeal (SCA) in Café Chameleon v Guardrisk Limited.

“The Ma-Afrika judgment resolved that there is cover for business interruption losses caused by Covid-19 itself and generally by the national lockdown and related restrictions imposed by government in response to the pandemic, provided that there was an occurrence of Covid-19 within the designated radius of the insured premises. The SCA decision in the Cafe Chameleon matter confirmed that approach,” Santam said.

Following the Ma-Afrika judgment, Santam increased its net CBI claims provision by R1.7 billion in addition to the R1.3 billion that was raised in June 2020, the group said.

Santam said its view is that the indemnity period is limited to three months.

The court, however, found that the indemnity period is eighteen months in this particular matter.



'Individual basis'

“Large corporate policies in the Santam Specialist Business will be handled on an individual basis due to their bespoke and complex nature,” the group said in its announcement on the NSX yesterday.

It continued: “Santam made the decision to include the claims from all commercial policies with CBI extensions after further analysis and consideration of recent court judgments.”

Santam said the potential outcome of an appeal against the Ma-Afrika judgment relating to the indemnity period and the extent of the group´s reinsurance recoveries may still impact Santam's assessment of the estimated net CBI claims.

“This could result in significantly higher or lower actual claims,” it said.