Insurers claim Covid guidance akin to five-a-day advice, court told
INSURERS have been criticised for comparing crucial guidance to stay at home during the pandemic to health advice encouraging people to eat their five-a-day, in a courtroom clash over business cover.
The claims were attacked by lawyers for the Financial Conduct Authority watchdog (FCA), which has launched a High Court test case against eight insurance firms over their business interruption policies.
Cash-strapped businesses are demanding payouts for heavy losses suffered when forced to shut, but the insurers say most policies were never designed to cover losses caused by a global pandemic. The Government ordered businesses such as bars and restaurants to close in March. Lawyers for the FCA attacked the insurers’ argument that many firms’ losses were not covered because they had already shut voluntarily after the initial advice for people to stay at home.
The insurers – which include Hiscox, RSA and Zurich – compared the Government’s stay-at-home guidance to public health campaigns to eat five portions of fruit and vegetables a day and to restrict alcohol intake to 14 units a week. On the opening day of the hearing, this argument was dismissed by the FCA’s lawyer Colin Edelman QC.
Speaking via video conference, he said: “In times of emergency and crisis the Government and the public understand the difference between what the Government was telling them to do in March of this year and exhortations to eat more fruit and vegetables.”
He said insurance policies should be interpreted in the context of the pandemic and a society where people realise they had a social responsibility to follow official guidance.
Leigh-Ann Mulcahy QC, also for the FCA, said that by staying open many businesses would have broken the law directly by contravening coronavirus regulations. The guidance “made it impractical for many businesses to function even if in law they could remain open”, she added.
Up to 370,000 businesses and more than 60 insurers could be affected by the outcome of the case, the court heard. The case is due to last eight days.