ExCel ruling opens up Covid BI payments for tens of thousands of policyholders

Appeal granted for five of the insurers involved in the case

Insurers could face payouts to tens of thousands of UK business interruption (BI) policyholders for Covid-19 losses after last month’s judgement in favour of the London International Exhibition Centre (ExCel).

According to law firm Penningtons Manches Cooper, the decision is likely to be a significant win for businesses and policyholders beyond the six claimants, which also included the Pizza Express restaurant chain.

The firm’s lawyers Colin Hayes and Michael Brown said the case has opened up insurers to a new wave of BI claims for previously denied Covid-19 losses.

“Unless action is taken across the board, insurers may be exposing themselves to a flood of potential further litigation,” they said.

The pair added that it remains to be seen whether insurers subject to the decision and other carriers using ‘at the premises’ wording will proactively revisit policyholders’ claims.

According to recent reports, the case now looks likely to go to appeal. Just last week, five insurers – Allianz, Aviva, CNA, Chubb and Zurich – were granted permission to appeal the judgement. RSA has chosen not to pursue an appeal, according to reports.

Handing down the judgement, Mr Justice Jacobs said the ‘at the premises’ disease wording at the centre of the trial covers “a large proportion of outstanding BI insurance claims from the pandemic”.

The case against a group of 13 different underwriters, led by RSA and including Liberty Mutual Insurance Europe and XL Insurance, picked up the ‘at the premises’ wordings omitted from the Financial Conduct Authority’s (FCA) test case at the Supreme Court, which concluded in January 2021.

At issue was whether the Supreme Court’s approach to causation for radius clause wordings tested in the FCA case, which ruled a business with a radius type clause only needed evidence that losses were the result of government action to control the spread of Covid-19, should equally apply to the at the premises wordings.

“This issue [‘at the premises’ wording] had, therefore, until now, remained an area of uncertainty, as a result of which most insurers have, to date, been consistently declining claims under clauses that include ‘at the premises’ type wording,” the lawyers said.

The judgement, heard in the Commercial Court, found that policyholders were correct that ‘at the premises’ is about the geographical scope of cover and the Supreme Court did not distinguish between different distances for radius, which should also apply to at the premises.

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