Covid insurance tested at High Court

LONDON’S High Court will decide whether insurance giants must ‘cough up’ over millions of pounds of losses by businesses shut down during the Covid-19 pandemic.

The ‘fascinating’ test case is brought by the Financial Conduct Authority - the UK regulator - and is a clash of the giants over ‘business interruption claims’ and is currently before top judges in the capital.

The FCA has brought the case on behalf of aggrieved policy holders but the result could affect around 370,000 British businesses and have global repercussions for an insurance industry already facing massive payouts because of the health emergency.

Political commentator Nick de Bois said 17 sample policies were being tested in an ‘amazing’ action by the regulator.

It was argued that policies should cover losses because businesses were ordered to shut down by public authorities - insurers argue the decision was voluntary and based on health warnings rather than legislation.

“For someone like me this is fascinating,” said Nick. “Lots of people took out business interruption insurance and did it on the basis that if their business was interrupted, they would be compensated by the insurance scheme.

“But there were lots of escape clauses; things like ‘in the event of a pandemic, we will not pay out’.”

Speaking on the Costa Blanca’s Bay Radio, the author and former Conservative MP said many businesses and premises were closed by public authorities such as local councils and Public Health England.

He said the FCA argued that if a business was shut down by a public body or the government, the insurer ‘should pay out’.

Nick explained: “Rather than we have lots of individual businesses having to take a case to court, which would take a long time; the FCA has essentially taken it on itself having received complaints from people not being paid out.

“It has taken 17 individual insurance policies, representing the vast majority of the sort of insurances issued, and put them in court to test them.

“They wish to get the court to settle this as soon as possible in the hope it will bring insurers into line based on a ruling from the court.”

And he added: “I think it is an amazing thing; if you can imagine as a business trying to take one of these giants to court. You have to get organised, get lawyers behind you and you have to create what is known as a ‘tort’ action and bring everyone together.”

Nick said the FCA case had brought huge insurance companies to court - including the RSA Insurance Group and Zurich Insurance Group - in a bid to achieve a binding ruling.

“Very large insurance companies are going to be given what is known as ‘clarity and certainty’ on whether they have to cough up or not,” he said.