Coronavirus (COVID-19)—Aviva and QBE face hospitality group action

Coronavirus (COVID-19)—Aviva and QBE face hospitality group action

The Hospitality Insurance Group Action (HIGA), one of two groups coordinated by Mishcon de Reya LLP, said it had made the decision after reviewing 500 business policies submitted by applicants between late April and early May.

It will now seek to secure funding for the group litigation by 10 June 2020 and issue proceedings shortly afterwards. The firm has instructed Philip Edey QC of Twenty Essex as counsel.

Mishcon is also coordinating litigation over rejected business interruption insurance claims for the Hiscox Action Group, made up of more than 400 businesses with a total claim of almost £40m.

The group was formed to co-ordinate a number of claims outside the Hiscox action. The group said it is ‘best advised’ to challenge four specific policies issued by QBE and one from Aviva. ‘The decision to limit a potential HIGA legal challenge to just two insurers with specific wordings was always going to be difficult, and we recognise many HIGA applicants will be disappointed we are unable to act for them’, Sonia Campbell, partner at Mishcon said.

Mishcon has invited businesses within the hospitality sector who are not part of the Hiscox Action Group to sign up with HIGA if they want to join the group litigation.

An Aviva spokesperson said standard business interruption policies do not cover losses from the pandemic. However he added that a ‘small number’ of policies bought through a broker might provider cover. In those cases, payments have already started being made, the spokesperson added.

A spokesperson for QBE declined to comment.

Mishcon said it will contact all the 500 businesses it had examined policy wordings on behalf of, but that only those with the specific QBE or Aviva policies will be able to participate in the group action.

Business interruption policies typically offer cover only against closures of a business premises resulting from damage to property, however some policies offer extensions to protect against public authorities ordering a business to close as a result of a contagious disease outbreak.

The Association of British Insurers and several other companies have said the policies were never intended to offer cover against pandemics.

The Hiscox Action Group and HIGA have emerged as the biggest groups to mount a challenge to the insurance industry, however at least three smaller groups are considering action, guided by the Night Time Industries Association and law firms Wright Hassall LLP and Fenchurch Law Ltd.

Alongside those moves, the FCA plans to take a sample of representative policy wordings to court as early as July to obtain an authoritative declaratory judgment on whether insurers are responsible for paying claims under certain policies. The findings will be legally binding on insurers, the FCA said.

This content is based on an article first published by Law360, a LexisNexis® company, on 20 May 2020 and is published with permission.

Further information can be found at: https://www.law360.com/insurance-uk (subscription required).

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