‘Final sprint’ as court action readied against insurers

By Emily Hawkins

- Last updated on GMT

Pressure building: insurers will face a court test to examine the wordings used in their business interruption policies
Pressure building: insurers will face a court test to examine the wordings used in their business interruption policies

Related tags Coronavirus

Trade bodies representing the pub sector have put their weight behind a test court case that will attempt to find legal clarity on the wording used by insurers that have denied operators pay-outs.

The Financial Conduct Authority (FCA) will test a sample of 17 policy wordings, which it believes captures the majority of the key issues that could be in dispute between insurers and operators, at the Commercial Court.

Its test case will involve eight insurers, including two of the largest companies with policies used by pub businesses: Hiscox and QBE.

Court action is scheduled to begin by 9 June, with the FCA planning to launch a trial in July. 

Which insurers are involved?

These insuranace companies use at least one of the policy wordings in the FCA’s representative sample which will be examined in the test case.

  • Allianz Insurance PLC (part of Allianz SE)
  • American International Group UK Limited (part of American International Group, Inc.)
  • Arch Insurance (UK) Limited (part of Arch Capital Group Limited)
  • Argenta Syndicate Management Limited (part of Hannover Re)
  • Aspen Insurance UK Limited (part of Aspen Insurance Holdings Limited)
  • Aviva Insurance Limited (part of Aviva PLC)
  • Axa Insurance UK PLC (part of AXA SA)
  • Chubb European Group SE (part of Chubb Limited)
  • Ecclesiastical Insurance Office PLC
  • Hiscox Insurance Company Limited (part of Hiscox Limited)
  • Liberty Mutual Insurance Europe SE (part of Liberty Mutual Group)
  • MS Amlin Underwriting Limited (part of MS&AD Insurance Group Holdings, Inc.)
  • Protector Insurance UK (part of Protector Forsikring ASA)
  • QBE UK Ltd (part of QBE Insurance Group Limited)
  • Royal & Sun Alliance Insurance PLC (part of RSA Insurance Group PLC)
  • Zurich Insurance PLC (part of Zurich Insurance Group Limited)

UKHospitality (UKH) has asked publicans who have had business interruption claims rejected to check the wording of their policies to make sure the authority’s representative sample does not omit any key points.

Final sprint

It said this was a matter of urgency as the FCA has set a deadline of 3pm on Friday 5 June for policyholders in the sector to comment on its representative sample.

Richard Bursby, partner at law firm Taylor Wessing, which has partnered with UKH on this issue, said the FCA’s process was “moving at warp speed”, meaning policyholders have just days to review their policies against the selected sample.

UKH chief executive Kate Nicholls added: “So many stakeholders have come together on this crucial matter. We now have a final sprint towards the deadline, to make sure that hospitality’s insurance plight is properly heard.”

Pub operators who have had rejected claims have been asked to check their policy against the sample wordings listed on the FCA’s website.​ If they feel that another wording should be included in the FCA test case, they are asked to email cv19@ukhospitality.org.uk with details.

Clarity sought

Several law firms have also announced they hope to pursue group action claims, with action proposed against main players​ such as QBE (UK) Limited and Aviva among others.

Insurers have overwhelmingly rejected claims from publicans for business interruption pay-outs, with some arguing the Government’s order for all UK pubs to close because of the coronavirus outbreak does not mean a pub had to close as a result of a contagious disease found within a nearby radius of it. 

British Beer & Pub Association chief executive Emma McClarkin said the FCA case would deliver clarity for the sector.

She said: “The BBPA views the action being taken by the FCA as the most robust and effective means of resolving the issues across a range of insurers and policies and, therefore, together with other industry bodies, we support the FCA’s initiative to bring clarity for thousands of struggling businesses.”

The organisation's membership survey last month found that some 67% had been rejected for insurance claims,​ while many reported they were still waiting for a response from their insurer.

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Related topics Legislation UnitedWeStand

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