By Ranamita Chakraborty
On the first day of an eight-day hearing regarding a case brought by the Financial Conduct Authority of UK (FCA), London’s High Court was told that some of the world’s biggest insurers are wrong to deny a pay-out to hundreds of thousands of small British businesses which were battered by the COVID-19 pandemic.
The national lockdown in the UK to curb the spread of COVID-19 triggered insurance claims from companies seeking compensation for having to shut down their activities. However, most insurers have rejected such claims stating that business interruption (BI) policies do not cover a global pandemic.
FCA had therefore started proceedings to seek clarity from the courts on whether the wording of BI policies should provide cover during this pandemic. Eight insurers including Hiscox, RSA, QBE and Zurich were taken to court.
According to a report from Reuters, FCA’s lawyer Colin Edelman told the court that the 17 policy wordings under scrutiny in the case were similar to wordings used by more than 60 insurers in total. He pointed out that around 370,000 policyholders could be affected.
The FCA said that the pandemic should trigger payments under the policies, which provide cover when insured premises cannot be used because of restrictions imposed by a public authority and in the event of a notifiable disease.
In response, the insurers stated that the policies covered local incidents, rather than a pandemic and national lockdown.
“They are not to be protected from the fact that a cataclysmic event has happened. That is just bad luck being an insurer,” said Mr Edelman.
The court hearing is due to conclude on 30 July.
Asia Insurance Review