Hospitality in the balance: When most hospitality businesses are fast approaching the last stages of survival mode, the insurance companies that were happy to accept their premium payments, have now gone to court to avoid paying out on Covid-19 claims.
The ‘consequentials’ hearing for the FCA Business Interruption Insurance test case yesterday, has resulted in yet more bad news for small businesses across the UK.
Insurers have decided to appeal the High Court’s ruling despite it being seen by many as clear and unambiguous. It ruled that many clauses within the relevant insurance policies are triggered following the closure of hundreds of thousands of businesses as a result of the Government’s actions in response to the Coronavirus outbreak.
The fact that Insurers have been granted permission for leapfrog appeals means that businesses continue to remain at risk whilst they wait months for the Supreme Court hearing (if the Supreme Court even agrees to hear the appeals). The fact that the case can ‘leapfrog’ the Court of Appeal is welcome in terms of cutting out a further procedural stage of appeals, but it still means that policyholders face many more months of uncertainty in relation to their insurance cover.
HIGA was just one of two policyholder action groups allowed by the High Court to make submissions in the test case and it plans to make further representations on behalf of its members at the Supreme Court if necessary.
Sonia Campbell, the Mishcon de Reya partner representing HIGA said of the decision: “Insurers could have walked a very different path and not undermined the reputation of much of the industry. They could have paid out when the cover under the policies was first triggered. They could have accepted the judgment and started making payments now. But the fact they have decided to seek permission to appeal shows they are determined to drag this out to the bitter end.
“Insurers’ approach in first seeking, and now obtaining, leapfrog certificates shows the lengths that they will go to to delay and defer decisions on paying out claims. Whatever happens after today’s hearing, policyholders should be under no illusions that recovery of claim proceeds will be easy. It is only by joining a well-resourced and properly funded group, that they can safely do that.
“Whilst Resilience policyholders will naturally be disappointed after today’s hearing, as we anticipated, despite losing on all grounds at first instance, RSA intends to continue to fight on all fronts as hard as it can to try to reverse the High Court’s Judgment on RSA4. With an appeal to the Supreme Court now firmly on the cards, individual Resilience policyholders will find it more difficult to obtain payment from their insurers any time soon; to improve the prospects of recovery, they should seriously consider joining our group now, before the hearing in the Supreme Court, to join other policyholders in the same boat to apply pressure on RSA and other Resilience insurers. Our aim remains to obtain payments for our group members in the shortest possible timeframe.
“There is now a window of opportunity for other businesses who have either QBE or RSA 4 Resilience policies to join us as we continue to do everything we can to exert pressure on insurers and to secure payments for policyholders in the shortest possible time frame.”
Hospitality Insurance Group Action (HIGA) is a policyholder group, launched on behalf of businesses in the hospitality sector to confront insurers who have continued to abstain from reimbursing losses resulting from COVID-19 and the Government’s lockdown action in response to it. HIGA is funded by Harbour, one of the largest litigation funders in the world.
The current Coronavirus pandemic has affected every sector and the hospitality industry is amongst the hardest hit. The Government’s lockdown has led to the forced temporary closure of hotels, restaurants, bars and cafes and these businesses believed that their business interruption policies would cover these losses.
The action from insurers shows clearly that they are happy to take premiums but will see good businesses go to the wall if that can help them to increase their own profits.
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Hospitality & Catering News: Hospitality in the balance – 3 October 2020 – Hospitality in the balance
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