The Supreme Court has upheld its judgement in favour of policyholders, on the Financial Conduct Authority’s business interruption insurance test case
Sonia Campbell, partner, Mishcon de Reya, who represented the Hospitality Insurance Group Action, said: "We are absolutely delighted that the Supreme Court's decision means that there is cover under the QBE1, QBE2 and QBE3 policies for all of our HIGA clients, as well as for the vast majority of policyholders with non-property damage Business Interruption (BI) cover – those businesses now have cover confirmed in principle for their business interruption losses caused by the national response of the Government to Covid-19. QBE should now pay all of the QBE policyholders that we represented at first instance without further delay.
“The Supreme Court has recognised that, just at the critical time when this cover was most needed most by thousands of struggling UK businesses, insurers were wrong to adopt the position that coverage was applicable only if there were narrow local restrictions, and that they could deny claims because the cover had not been intended to be provided and/or because the interruption and therefore losses would have happened in any event. These arguments have been comprehensively dismissed by the Supreme Court.
“We hope that this judgment will come as a massive boost to all those businesses still reeling from the third lockdown. Covered businesses can now demand that their claims are paid.
“In a detailed analysis of insurance law on proximate cause and causation, the Supreme Court has clearly and efficiently torpedoed the academic and convoluted arguments of insurers and laid down clear guidance as to how these claims should be paid. In commenting that it is no surprise that the Court has come to this view, in an even more comprehensive way than the Commercial Court did, the Supreme Court has also paved the way for policyholders to make additional claims for delayed payment of claims.
“It is a resounding but long overdue success for businesses, but we recognise that it may still be too late for many. The claim adjustment process that must now happen should happen immediately, and insurers must not be allowed to drag their heels and cause further distress."
Hiscox Group said that the total group estimate for business interruption increased by $48m net of reinsurance.
The group said that Hiscox's exposure to potential business interruption claims arising from further UK government restrictions to contain the spread of Covid-19 had been running off at approximately 8% per month from June 2020, with residual exposure to be fully run off by the end of June 2021.
Following the judgment, the group estimated exposure to restrictions already announced in 2021 at less than $20m if restrictions extended to the end of March.