Victory for those refused business interruption insurance claims

17 Janvier, 2021, 21:56 | Auteur: Auguste Feret
  • Supreme Court

The decision will result in payouts for many hospitality businesses and is based on a four-day hearing that saw insurers Argenta, Arch Insurance, Hiscox, MS Amlin, RSA, QBE UK and policyholder action groups Hiscox Action Group and Hospitality Insurance Group Action join the FCA in seeking clarity on whether specific policy wordings cover business interruption caused by the first Covid-19 lockdown.

In a closely watched £1.2bn legal battle that began a year ago, cash-strapped businesses have been demanding payouts for heavy losses suffered when they were forced to shut during the first lockdown.

Financial Conduct Authority boss Sheldon Mills has urged to insurers to "move quickly" to pay claims for business interruption caused by the Covid-19 pandemic.

The legal process was fast-tracked to the highest court in England and Wales which rejected the insurers' arguments and said it had "substantially allowed" an appeal brought by the FCA and action group to clarify the position.

But senior judges said many payouts should be triggered after scrutinising non-damage insurance policy clauses - which cover disease, denial of access to business premises and hybrid clauses - in a victory for policyholders and the regulator.

The Supreme Court noted that the case was brought forward by the FCA to appeal certain issues on which it did not succeed in the High Court cases, along with HAG.

The High Court initially backed insurance policyholders in September by ruling the majority of businesses that held business interruption insurance and were forced to close due to the Covid-19 pandemic were entitled to compensation.

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"The judgment should be a massive boost to all businesses reeling from a third lockdown who can now demand their claims are paid", said Richard Leedham, a partner at law firm Mishcon de Reya who represents the Hiscox Action Group.

Hiscox shares were trading more than 4% down after the ruling.

"What is important now is that Hiscox accepts the Supreme Court's verdict and starts paying out to its policy holders, many of whom are in danger of going under".

It is unclear whether the decision will prompt a flood of further claims.

Smethurst caveated, however, that there will likely be both positive and negative fallout from the Supreme Court decision for businesses.

"Hopefully this outcome will give many small businesses in the hospitality sector peace of mind and possibly some financial support they need to begin rebuilding".

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