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Interruption Underwriting Agencies

Hospitality group takes aim at insurers in UK test case

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The Hospitality Insurance Group Action (HIGA) has argued its case against insurers including QBE as a business interruption test case continues in the UK High Court.

“It’s not, of course, our case that the policy provides specific cover for pandemics,” Philip Edey QC told the court last week, in reference to QBE’s cover.

“Our case is simply that, with a notifiable disease, cover provided by the policy extends to a case where the notifiable disease becomes a pandemic, as well as to less widespread diseases.”

HIGA and the Hiscox Action Group have both been allowed to participate in the test case, which is being run by the Financial Conduct Authority (FCA).

The insurers involved are Arch, Argenta Syndicate Management, Ecclesiastical Insurance Office, Hiscox, MS Amlin, QBE, Royal & SunAlliance and Zurich.

Issues argued last week included the impact of various policy wordings that point to whether a disease was present within 1-25km of a premises and the impact of government shutdowns and their legal force.

“COVID-19 and the response to it should be seen as one indivisible thing on which the cases in the area are a part, and if that is right then we are home,” Mr Edey says in a transcript published on the FCA website.

The court was told that by March 16 every one of the 32 London boroughs had at least one confirmed case of COVID-19, and by March 20 nine had more than 200 cumulative cases.

“On the basis of all that, an insured in London must plainly be able to say that a cause – indeed if necessary a proximate cause – of the shutdown was the cases in London,” he said.

Earlier in the case, FCA Counsel Leigh-Ann Mulcahy said much was made by insurers over whether government requirements on restrictions were enforceable and legally binding.

“It has to be remembered that there was a legal underpinning to all of the Government’s requirements whether or not they were specifically legislated for, and this is also relevant to the businesses which remained even partially open, of which there were very few,” she said.

“We would say it wasn’t open to policyholders to breach the UK Government’s advice and guidance without risking a breach of their legal duties regarding the health and safety of employees, and as occupiers in relation to the public.”

Gavin Kealey QC, who represents Ecclesiastical and MS Amlin, began putting forward the insurers’ case on Thursday, arguing against the FCA’s disease location points.

Insurers will continue putting their case today, with the hearings scheduled to conclude on Thursday.