“It’s unacceptable”: Restaurant owners respond to Santam’s offer of 3 months settlement

Hospitality businesses such as restaurants and hotels breathed a sigh of relief late in 2020 when the Western Cape High Court ordered Santam to pay out two local businesses for the full 18-month period of their contracts, covering them for business interruption during Lockdown, beginning 27 March 2020.

Many took this as a sign that Santam would honour the policies and payout for lost income of other hospitality businesses, who are variously insured for different periods of indemnity ranging from 6, 12 to 18 months periods.

The indemnity period is the period of time for which policyholders can claim for losses.

However, the industry received another blow yesterday with Santam’s decision to offer “its Hospitality & Leisure customers a full and final settlement of only 3 months of losses” as reported by Johannesburg-based specialist public loss adjuster, Insurance Claims Africa.

ICA told Eat Out that they are “unsurprised but disappointed by Santam’s decision to limit its full and final settlement offers to 3 months”.


Restaurant owners furious

Restaurant owners spoke with Eat Out and expressed their anger and their frustration at Santam’s response.

One restaurant owner spoke to us on the condition of anonymity, as they still have an unprocessed claim with Santam. They said, “It has gone way further than obtaining legal certainty for their reinsurers. Santam know that we as restaurants and other hospitality businesses are in the most vulnerable position we’ve ever been.”

They employ more than 90 staff members, and with this news, they are unsure how long their doors can remain open. “Now their latest manoeuvre of offering a “Full and final” claim for only 3 months indemnity is yet another calculated move to put insured businesses between a rock and a hard place. Very few businesses are in the position to get through as long as it takes for the appeal to resolve, and as a result many will take this paltry 3month pay out (minus the interim payment which was made last year) in place of the 12 or 18 months that they have been insured for, on condition that they can make no further claims.”

Cape Town chef and restaurateur Liam Tomlin, who operates 6 successful restaurants across the city and employs over 300 staff members, is one of Santam’s affected customers. He said, “It’s unacceptable. They must pay up for what each individual policy is covered for. They are taking advantage of the second round of restrictions hoping we will all cave and accept their disgusting behaviour. We will not (accept) 3 months settlement, I want what I paid for and what I’m entitled to.”

Ross Kudo, a partner at Kudo Law, is representing a number of Tomlin’s restaurants, which are insured by Santam for business interruption. He said, “Our courts, including the Supreme Court of Appeal, have come out overwhelmingly in favour of the insured.  It is therefore regrettable that Santam is, it would seem without any real justification, putting restaurant owners in a position where they are faced with the choice to either cave in or engage in further costly and drawn-out litigation. For the sake of the many restaurant owners that find themselves on the brink, I hope that Santam is willing to reconsider its approach.”

Ryan Woolley, CEO of Insurance Claims Africa, says, “Offering 3 months in full and final settlement and forcing their customers to sue them for the balance is grossly unfair and unconscionable. These actions suggest that it is no longer legal certainty that Santam seeks, but that it is in fact trying to take advantage of vulnerable clients who are desperate for funding.”

Santam and other insurers have argued that it was the Government imposed lockdown, and not Covid-19, that caused the losses, however, the courts have found that the two events are linked: a lockdown would never have occurred without Covid-19.

In November 2020, the Western Cape High Court ordered Santam to pay Ma-Afrika Hotels and Stellenbosch Kitchen for the full 18-month period of its contract, but Santam has now said it will concede liability and only appeal the question of the indemnity period at the Supreme Court of Appeal.  It will argue for leave to appeal on 16 February 2021.

“While we are encouraged by Santam’s acknowledgement that legal certainty has been established, they continue to pick and choose what suits them in the court rulings. Santam’s Stalingrad strategy of delay, deny and defend has put its customers under excruciating financial stress.  The real tragedy is that if these businesses are forced to shut down as a result of Santam’s non-payment, their claim against the insurer is extinguished. Offering a full and final 3-month settlement on a valid 18-month contract is unacceptable. Shareholders should be questioning who has given this strategy to Santam as it demonstrates a lack of respect for their customers, the South African judiciary, and the FSCA, and displays a level of arrogance that no matter how poorly you treat your customers they will remain loyal.”

Santam has said that each policyholder will need to take it to court individually to challenge the indemnity period beyond the 3 months it is willing to pay.

“This latest cynical and devastating move proves how disingenuous Santam is. Policyholders, who are already financially decimated, will now have to find the money to fight the insurer in court to enforce the indemnity periods contained in their contracts,” says Woolley.

Santam responds

Eat Out reached out to Santam directly for comment on the recent news.

In a statement, Santam said, “Santam has previously stated that it respects the decision of the courts and believes that the recent judgments are sufficient to provide legal certainty in terms of the proximate cause of business interruption losses for policies with the same conditions, characteristics and circumstances to the Ma-Afrika and Café Chameleon judgments.

Santam has consistently said that it was pursuing a speedy resolution of the matter. The process of seeking legal clarity was agreed by all parties concerned and therefore it is untrue that Santam has attempted to delay the process. ”

In the written statement, Santam addresses further issues.

  1. Appealing the 18-month indemnity period ruling

Santam is firm in their belief that “The Ma-Afrika judgment does not set legal precedent for the indemnity period for all other policies. It is Santam’s view that the Western Cape High Court erred in its judgment in applying an 18-month indemnity period across the entire policy. ”

  1. Settlement of claims on a three-month indemnity period
    As previously stated, the 18-month indemnity period applies only to the Ma-Afrika policy and can therefore not be construed as legal precedent, particularly in view of Santam’s intention to appeal this ruling.

The Hospitality & Leisure Division policies that are impacted by the recent court rulings and are currently being processed by Santam specifically carry three-month indemnity periods. It is for this reason that Santam is offering full and final settlements in respect of these claims.


  1. Claims by businesses in liquidation
    “Santam would like to clarify that businesses that have incurred claimable losses and have gone into liquidation post March 2020 can still claim against their policies with contingent business interruption extensions.”


Woolley says that ICA will continue to fight for these businesses which are in a desperately vulnerable sector.


Read the full Sanlam Statement here of 4 January 2021 and 12 January 2021. 


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