Santam H&L CBI claims Questions & Answers?

by Olive Insurance Brokers, with information provided by Santam and H&L | 05 January 2021

Santam yesterday announced that it will commence the process for assessing claims for H&L policies with CBI extensions. Detailed here are anticipated questions and answers provided by Santam related to this process.
Despite Santam's promise and efforts to significantly increase CBI claims processing capacity, Olive Insurance Brokers is anticipating a claims handling bottleneck due to the volume and complexity of CBI claims. We therefore strongly recommend that our clients study the information provided carefully, prepare and collate the necessary information urgently, and submit it all as a well-collated information pack as soon as possible. This will greatly assist in getting "front-of-cue" claims treatment and reduce delays as far as possible.

1. What is required for a client to formulate a claim for Contingent Business Interruption loss?

Santam has appointed a number of loss adjusters to assist with the assessment of business interruption claims. Clients will be requested to submit information and/or documentation relevant to the nature of their business and cover as required by their policy. This information includes the following:

1.1.  The Annual Financial Statements and the detailed Income Statement in respect of the past three financial years.

1.2  The year-to-date detailed Income Statement for the current financial year.

1.3  Monthly management accounts for the 2018 and 2019 financial years and for the current financial year to date. The monthly management accounts will be required for the current months, as they become available.

1.4  VAT 201 returns in respect of the financial year ended February 2020, as well as for the current financial year to date. The VAT returns will be required for the current months, as they become available.

1.5  Copy of the current lease agreement (where applicable).

1.6  Confirmation and substantiation in respect of:

   -  The retention of staff; and if retained, remuneration agreements; enforced leave; unpaid leave, etc.

   -  Application and receipt of any government assistance (TERS / UIF, etc.)

   -  Any government financial assistance in respect of Tourism relief

   -  Confirmation of any rental abatement / relief

   -  Revenue generated from foreign travellers (if applicable)

   -  Confirmation that the disease was in the radius at 27 March 2020, or if not, the date the disease first entered the radius

   -  Details and substantiation of any steps taken to mitigate the Business Interruption loss.

2. Has Santam considered a more simplified approach to claims formulation?

Yes. Santam is currently engaged with relevant stakeholders, including reinsurers, on a simplified claims formulation approach for all policies where the annual sum insured on the policy is less than R10 million. More information will be provided as and when this becomes clearer.

3. Must policyholders prove the disease exists or existed within the radius?

Yes. In respect of all claims, the Court determined in the Ma-Afrika and Café Chameleon cases that the client must provide reasonable proof that a positive case of COVID-19 existed within the radius as stated in the policy schedule. Such evidence is required as at 27 March 2020, the date of the national lockdown.

Where disease only became present within the radius at a later stage after the lockdown date, the rulings in respect of both Courts are silent on policy response. In anticipation of the outcome of further legal analysis in progress, we request where this is the case, that clients in the interim still confirm the later date such instance of disease first occurred within the radius. We will share further progress on this matter later.

According to Santam, in line with the Court requirement for the disease to exist within the radius for there to be a valid claim, if no case of COVID-19 existed within the radius before 1 June 2020, there will be no claim for Contingent Business Interruption. The date of 1 June refers to the effective date Santam and H&L endorsed their commercial policies to exclude any cover related to the effects of COVID-19.  

Santam has requested information related to the spread of the disease from multiple sources, particularly the National Institute for Communicable Diseases (NICD). As soon as such information is made available, it will be proactively used to recognise the existence of the disease within the stipulated area of the client’s premises and the date each such occurrence arose. If received, and unless clients dispute the information from the NICD or such relevant sources, no further evidence will be required from them. 

Santam highlights the fact that the onus to provide reasonable proof that the disease existed within the radius remains on the policyholder in the event the NICD or other relevant information is not made available to Santam.

4. Could travel restrictions imposed by other countries impact the quantum of my client’s claim?

According to Santam, yes. This will be an important aspect to watch, to ensure fairness in Santam’s treatment of this matter, and we request our clients to carefully consider this when formulating their claims.

According to Santam, the policy wordings reviewed by the Courts to date afford cover for business interruption as a result of COVID-19 and the government response to it (including the lockdown), provided there has been a local occurrence. As such, the lockdown is part of the insured peril rather than a consequence of it, and no adjustment to the trend of a business may be made for the national lockdown.

However, the indemnity in terms of the policy remains to put the insured in the position they would in fact have been had the insured peril not occurred. Any relevant loss of revenue that is not a consequence of the damage (local instance of COVID-19 and the SA national lockdown) is therefore relevant. The most material of such factors is travel restrictions imposed by foreign countries irrespective of the national lockdown in South Africa. A client’s turnover and resultant claim will be adjusted to exclude the impact of revenue generated from clients / guests whose business or travel would have been impacted regardless of the South African government’s actions.

5. What indemnity period will Santam use to assess H&L claims?

Santam will continue with its application for leave to appeal in respect of the Ma-Afrika ruling with regard to the indemnity period. Santam will therefore now assess claims based on the three-month indemnity period that it believes is applicable to all business interruption extensions as stated in the policy. We will inform our clients if / when the SCA upholds the lower court’s ruling, and Santam is confirmed to be liable to pay for the full indemnity period.

6. How will Santam handle the relief payment that some clients received previously?

Any relief payment already received will be considered an interim payment of a claim and will be off set against any final claim amount due. Where no valid claim arises but a relief payment was paid, Santam will not recover the relief payment.

Olive Insurance Brokers will be attending a Santam claims Webinar on 14 January 2021. The webinar will provide more detail and discuss the key legal principles that influence quantum, clarify the claims assessment processes outlined in this communication and provide further confirmation of key Santam and H&L contact points, claims tracking processes and escalation channels. You may direct any of your questions to your Olive representative before the Webinar, or send your questions to We will ensure they are addressed in this session.