Delphisure Group Insurance Brokers Cape (Pty) Ltd v Dippenaar and Others

Delphisure, an insurance brokerage, devised a crop insurance product known as 'Farmsure' and, through Bexsure, marketed it to Western Cape wheat farmers for the 2004 season. Although presented as an existing product fully underwritten by Lloyds of London, Lloyds had not yet agreed to underwrite it and ultimately never did. At marketing meetings, including one attended by the first and second respondents, Farmsure was represented as available and underwritten. Relying on these representations, the respondents cancelled or withdrew existing applications for crop insurance with Mutual & Federal and applied instead for Farmsure. The Farmsure product never came into existence due to failure to meet underwriting requirements, and when the respondents’ crops later failed, they were uninsured and suffered pure economic loss. They sued Delphisure and Bexsure for negligent misrepresentation.

The appeal was dismissed in respect of the first respondent’s claim. The appeal was upheld in respect of the second respondent, whose claim was dismissed with a costs order against him. Delphisure was ordered to pay the first and third respondents’ costs of appeal, and the second respondent was ordered to pay 30% of Delphisure’s appeal costs.

The case is a leading Supreme Court of Appeal authority on negligent misrepresentation causing pure economic loss, particularly in a commercial and insurance context. It clarifies foreseeability, negligence, wrongfulness, and policy considerations governing liability for pure economic loss in South African delict law.