* Supreme Court paves way for new wave of COVID-19 claims
* Judges dismiss insurer appeals against High Court ruling
* FCA, Hiscox Action Group appeals 'susbtantially allowed'
* Hiscox shares fall 5% on announcement before recovering
* Lawyers say struggling small businesses thrown lifeline
(Adds comment from Arch, lawyers, analysts, details)
By Kirstin Ridley and Carolyn Cohn
LONDON, Jan 15 (Reuters) - Small businesses, from
restaurants to nightclubs and wedding planners to beauty
parlours, on Friday won the right to insurance payouts after
Britain's highest court ruled many policies should cover losses
caused by coronavirus lockdowns.
Six of the world's largest commercial insurers -- Hiscox
, RSA, QBE, Argenta, Arch
and MS Amlin -- argued many business
interruption policies did not cover widespread disruption after
government efforts to curb the virus from last March.
But the UK Supreme Court unanimously dismissed appeals by
the insurers after scrutinising non-damage insurance policy
clauses -- which cover disease, denial of access to business
premises and hybrid clauses -- in a comprehensive victory for
the regulator and policyholders.
The Financial Conduct Authority brought the closely-watched
test case on behalf of policyholders last June, saying it could
affect 370,000 policyholders and 60 insurers, paving the way for
an estimated 1.2 billion pounds ($1.6 billion) in claims.
Alistair Handyside, chair of the Professional Association of
Self-Caterers UK, said he was delighted by a judgment that would
mean survival for many amid a third lockdown.
Some policyholders, however, are weary.
"It would appear we have won another battle this morning 10
months too late," said Murray Pulman, who runs The Posh
Partridge cafe in Dorchester, southwest England.
"The war is not over, however," he said. "Getting payment,
compensation and costs ... is another whole new fight which
begins today."
QBE FACES LATE PAYMENT CLAIM
Sonia Campbell, a partner at law firm Mishcon de Reya who
represents a group of policyholders, said she would be seeking
damages for late payment from QBE. The Australian-listed insurer
was not immediately available for comment.
Hiscox, MS Amlin, Argenta and RSA said they would be paying
claims as soon as possible. Arch stated that some of its policy
wordings would now respond to pandemic claims.
Hiscox, whose shares dropped more than 5% before recovering,
estimated its 2020 estimate for pandemic-related business
interruption had risen by $48 million net of reinsurance,
bringing total claims to 136 million pounds.
Barclays analysts said the ruling was negative for insurers
but no "game-changer".
The FCA said it would work with insurers to ensure they
settled claims quickly and made interim payments if possible.
The case turned on the wordings of business interruption
policies with clauses offering cover when insured premises
cannot be accessed because of public authority restrictions, in
the event of a notifiable disease within a specified radius and
hybrid wordings.
Insurers said they were paying valid claims but that they
could not provide limitless cover for losses when the bulk of an
economy was shut down and people consigned to their homes in the
toughest restrictions on public life since World War Two.
London's High Court ruled last September that some insurers
had been wrong to deny cover, prompting six insurers, the FCA
and the Hiscox Action Group of policyholders to challenge
elements of the ruling they had lost. The case leapfrogged the
Court of Appeal because of its critical nature.
Christopher Croft, CEO of insurance brokers' association
LIIBA, said the industry's reputation had been damaged. "We need
to think hard about how we redress that," he said.
($1 = 0.7348 pounds)
(Reporting by Kirstin Ridley and Carolyn Cohn
Editing by Rachel Armstrong, Jane Merriman and Louise Heavens)
Hiscox (HSX)