The Western Cape High Court has ordered insurance company Guardrisk to pay the business interruption claims of Cape restaurant Cafe Chameleon. The ruling has been welcomed by specialist public loss adjustment firm Insurance Claims Africa (ICA).
“This is a significant win for the tourism and hospitality sector,” highlighted ICA CEO Ryan Woolley. “While there is no doubt that this is precedent setting, we expect the judgment to be appealed, so it is still a long way from payment. Of critical importance, is the fact that Judge Andre le Grange rejected the insurer's argument that the losses suffered by the claimant was [sic] due to the lockdown, and not the Covid-19 pandemic.”
Business interruption insurance is intended to help companies survive unanticipated events. It is intended, ICA explained, to allow businesses to pay their staff, rates, rent and so on, and so survive a crisis. It can be for an agreed amount of money, or for an agreed time period. Tourism and hospitality enterprises can specifically insure against business interruption caused by contagious or infectious notifiable diseases.
ICA was currently helping some 500 tourism and hospitality businesses in their struggles to get insurance companies to pay out their business interruption claims. All ICA’s clients have the insurance against business interruption caused by notifiable diseases. But South African insurance companies have been claiming that business interruption has been caused by the government-ordered national lockdown, and not by the pandemic.
“This argument has never made any sense, as the insurers chose to insure a notifiable disease which would have contemplated government intervention and restrictions or quarantine,” pointed out Woolley. “It is clear that without Covid-19, there would be no lockdown, so to attempt to separate the two is nothing short of disingenuous.”
South Africa’s hospitality and tourism sector provides more than 740 000 direct and 1.5-million indirect jobs. It includes many micro and small enterprises and contributes 8.6% of the national gross domestic product. The Tourism Business Council of South Africa reports that the sector also provides business worth some R206.5-billion a year to its supply chain, acquiring goods and services from the agricultural, automotive, fuel, furniture, marketing, security and textiles sectors, among others.