Insurers' appeal 'another nail in the coffin' for trade'

The Financial Conduct Authority (FCA) business interruption insurance test case saw the High Court rule that most businesses with this insurance should be entitled to compensation​ after being shut down by the Government in March.

The court also ruled compensation should return businesses to the position they would have been in had the pandemic never happened, subject to the limits of each policy.

The leapfrog appeals process means the case will now be passed to the Supreme Court.

Sonia Campbell, the Mishcon de Reya partner leading the action on behalf of Hospitality Insurance Group Action (HIGA), said the appeal was another attempt by insurers to delay paying out.

Dragging their feet

Campbell said: “The decision by Insurers to appeal is another nail in the coffin for small businesses across the country. Rather than agreeing to abide by the court's judgement and now pay claims, it is disgraceful insurers continue to drag their feet and watch more and more of their own policyholders go to the wall. The action of the insurers shows exactly why there is a need for policyholders to join forces and take action together”.

"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.”

The initial decision by the High Court may have affected some 370,000 policyholders. 

On the whole, pubs have struggled to receive insurance pay outs for the 105-day enforced closure ordered by the Government between 20 March and 4 July.

“Insurers could have walked a very different path and not undermined the reputation of much of the industry," Campbell added.

"They could have paid out when the cover under the policies was first triggered. They could have accepted the judgement 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.”

Emma McClarkin, chief executive of the British Beer & Pub Association, said she hoped the leapfrog appeal would conclude the process "as soon as possible".

She said: “The High Court ruling in favour of most of the arguments put forward by the FCA on behalf of policy holders was a glimmer of hope for many businesses including pubs seeking insurance pay-outs for business interruption.

“We continue to monitor developments closely and support the FCA on its challenge and its ongoing discussions with insurers to avoid the need for an appeal at all.”

UKHospitality boss Kate Nicholls added: “It is disappointing that the insurance industry is not supporting policy holders with legitimate and comprehensive specialist insurance. Businesses have taken out policies in good faith and now they are not seeing them honoured.

"Insurance money is going to be critical for the recovery of businesses, but many are going to fail before the appeal is heard.”