UK court ruling favours Covid insurance claimants

Hiscox, RSA, Zurich and five other companies were named in the case, which was brought by the UK’s Financial Conduct Authority (FCA) in an effort to bring legal clarity to policies held by at least 370,000 clients. 

UK insurers face the prospect of further payouts after a London court ruled in favour of policyholders on most issues in a dispute over Covid-19 claims.

Hiscox, RSA, Zurich and five other companies were named in the case, which was brought by the UK’s Financial Conduct Authority (FCA) in an effort to bring legal clarity to policies held by at least 370,000 clients. 

The ruling is binding for the eight insurers, and could affect others that have policies with similar wording, including Allianz, American International and Chubb.

Ireland’s Commercial Court is to hear a Covid claims test case between publicans and FBD early next month. 

In May, FBD confirmed the receipt of more than 700 Covid-linked ‘business interruption’ claims from commercial clients, but said it would not pay out over loss of business due to the pandemic.

FBD has approximately 1,300 pub owners among its business customers. It has been estimated FBD could be looking at a financial exposure of up to €30m across its pub portfolio if it were to lose the case.

The London court ruled in the FCA’s favour on the “majority of the key issues,” it said.

Yet, insurers also found cause for optimism. Hiscox estimated the impact at less than £100m (€108m) after compensation from its reinsurers - about £150m less than its worst-case scenario.

The London case is one of thousands of legal battles around the world centered on business-interruption policies that insurers contend don’t cover pandemics. 

US retailer Century 21 Stores sued several of its insurance providers over the failure to pay about $175m (€147m) in claims, money the chain insists could have helped it avoid bankruptcy. 

-Bloomberg and Irish Examiner