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By Kirstin Ridley and Carolyn Cohn
LONDON, Jan 15 (Reuters) - Thousands of businesses should be
covered by their insurance for losses caused by coronavirus
lockdowns, the UK Supreme Court ruled on Friday, in a test case
that pitched the industry regulator against major insurance
companies.
Small businesses, from restaurants to nightclubs and wedding
planners to beauty parlours, have said they faced ruin after
attempts to claim compensation for business losses during the
pandemic were rejected by insurers.
Six of the world's largest commercial insurers -- Hiscox
, RSA, QBE, Argenta, Arch
and MS Amlin -- said many business
interruption policies did not cover widespread disruption after
Britain's first national lockdown last March.
But senior judges said many payouts should be triggered
after scrutinising non-damage insurance policy clauses -- which
cover disease, denial of access to business premises and hybrid
clauses -- in a victory for policyholders and the regulator.
Shares in insurer Hiscox tumbled by more than 5%.
The Financial Conduct Authority (FCA) said it would be
working with insurers to ensure they quickly settled claims they
were now required to pay and to make interim payments if
possible.
The FCA took insurers to court last June in a case expected
to have ramifications for 370,000 policyholders, 60 insurers and
billions of pounds in claims because many policies have similar
wordings. The case has been watched closely as similar battles
brew.
The six insurers, the FCA and a group of policyholder
claimants, the Hiscox Action Group, had challenged elements of a
High Court ruling handed down last September that they had lost.
"The judgment should be a massive boost to all businesses
reeling from a third lockdown who can now demand their claims
are paid," said Richard Leedham, a partner at law firm Mishcon
de Reya who represents the Hiscox Action Group.
"The hope and expectation of our clients is that the claim
adjustment process starts immediately and that insurers will not
continue to cause further distress by further unnecessary
delay."
(Reporting by Kirstin Ridley and Carolyn Cohn
Editing by Rachel Armstrong and Jane Merriman)
