Furnisher major Lewis is battling its insurers over a multimillion-rand business interruption claim linked to the breakout of Covid-19 five years ago.
The country’s largest furniture chain has claimed an amount “not exceeding” R1m for each of its 628 stores at the time, as a result of business interruption due to the Covid-19 lockdown.
All in all, Lewis’ claim comes in at R422m, nearly half of the R1.2bn operating profit it reported in the year to end-March.
However, the insurers tendered up to R1m for losses sustained by the group as a whole, setting the parties on a collision course that is now set to be resolved via arbitration.
The parties’ interpretation of the policy agreement they entered into is the crux of the dispute. Insurance groups include Emerald Risk, Hollard, Santam and Guardrisk.
Lewis declined to comment on the matter.
The outbreak of Covid-19 raised various questions regarding insurance coverage in relation to related losses, exposures and liabilities.
One of the most instructive cases in SA is a 2021 judgment by the Supreme Court of Appeal (SCA) that brought legal clarity and finality on the interpretation and application of certain contingent business interruption policies. The matter involved Santam, SA’s largest general insurer, and Ma-Afrika Hotels.
A high court in 2020 ruled that Santam had to pay Ma-Afrika for the impact of Covid-19 over the entire policy period of 18 months, without limitations. A year later this judgment was endorsed by the SCA, which criticised Santam for its many “twisted and turned” policy arguments presented in an attempt to “studiously avoid liability”.
Lewis has been expanding its operations over the past five years and now has 918 stores, with plans to open 200 more over the next five years.
The owner of Beares, Best Home & Electric and UFO is worth more than R4.2bn on the JSE, with its share price soaring almost fivefold in the past five years.
The group’s footprint covers major metropolitan and rural areas in SA, as well as neighbouring African countries.
Founded in Cape Town in 1934, Lewis Group has been listed on the JSE since 2004 and employs more than 10,000 permanent staff.
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