THERE was a Covid-related blow to the insurance sector today when a High Court ruled that they must pay out on their disputed Business Interruption policies.
The Financial Conduct Authority brought the case on behalf of policyholders against the insurers.
Lawyers said the judge had ruled in favour of the claimants “on the majority of key issues”. That could be a lifeline to thousands of businesses struggling to cope with lockdown and the after effects.
Paul Lewis, partner at Herbert Smith Freehills, which acted for the FCA, said: “This is a really significant judgment. It brings guidance to how business interruption insurance wordings should operate in the context of the COVID-19 pandemic, which has had such a devastating effect on businesses across the country. The decision should bring welcome news to a significant number of policyholders who will need to read the judgment carefully and see how the principles laid down by the Court apply to their particular policy wording.”
The findings could affect 370,000 policyholders.
Shares in insurers tumbled initially.
Michael Kill CEO of the Night Time Industries Association said: “This verdict is just what we’ve been waiting for. The night-time economy has been one of the hardest hit by lockdown measures during the pandemic, and many businesses are grassroots, family owned venues, that are cultural cornerstones of towns and cities across the UK.”
Simon Mabb, managing director of hospitality broker NDML, said: “We’re so pleased that these months of hard work have paid off for our clients. This is the result we all knew was the right one from the beginning, and it’s frustrating that it’s taken so long to reach this point. But it’s reassuring to know that we can now give some certainty back to the venues and businesses that have had their lives put on hold for so long.”
