In this recent Namibian High Court judgment, the insurer argued that the policy was invalid, and could not be concluded, because the formation of an insurance contract depends on the happening of a specified uncertain event and that at the time of the conclusion of the policy the event was already certain.

The insurer argued that the outbreak of the Covid-19 pandemic had already occurred in March 2020 before the conclusion of the insurance agreement in April or May 2020. 

The insurer argued that the essence of an insurance agreement is that the event insured against must be uncertain in the sense that it had not yet occurred at the time when the insurance contract is concluded. If the uncertain event occurred prior to the conclusion of the contract there can be no liability in insurance law.

The court accepted that the fundamentals of the insurance contract require the obligation of an insurer to be dependent on the occurrence of an uncertain or unplanned event.  And if the happening of an event became a certainty prior to conclusion of the contract, there is not a possibility but a certainty of harm and accordingly no risk to insure. The court agreed that insurance contracts are in essence risk-based and it is on the assessment of the risk that the terms of the particular insurance agreement are crafted and the resultant premiums determined.

On the particular policy wording and the pleaded facts, the court found however that the relevant insuring clause spoke of an “illness sustained” as a result of the outbreak of Covid-19 and not the outbreak itself.  The court therefore found that it was the occurrence of the illness at each relevant locality which was the insured peril.

The court said that the outbreak may well have manifested coupled with relevant notification requirements but it remained uncertain as to when, if and how many occurrences of Covid-19 would still take place and that the number of persons that would become infected remained uncertain.

The court held that on “a modern, contextual and business-like interpretation of the insurance agreement” and the meaning of the word “occurrence”, it was apparent that the uncertain and insured peril could not be the outbreak or notification related to Covid-19 but the actual occurrence of the disease. The court said that the possibility of infection with the virus was the uncertain event and the risk insured against.  Not the outbreak of the virus itself.

The decision was decided in relation to an objection to the claimant’s pleaded case and the specific policy wording.  There was no finding in relation to facts that might give rise to an actual claim.