Aviva and QBE have become the latest insurers to be targeted by customers angry about their refusal to pay claims on business interruption policies.
Hospitality Insurance Group Action, which is working with bars and restaurants that face ruin because of the pandemic, plans to focus on the two companies after its lawyers said the wording of their policies offered the best chance of success.
It is now looking for litigation funding to help pay for legal action.
There are growing rows between companies and insurers over business interruption insurance. Insurers say the vast majority of policies do not cover the sort of disruption caused by the pandemic. But customers, many of which are small businesses, argue that the wording of their contracts does provide coverage.
Law firm Mishcon de Reya, acting on behalf of HIGA, reviewed 500 policies.
“Some of [the wordings] just don’t respond . . . then there are a whole load where there is arguably coverage,” said Sonia Campbell, a partner at Mishcon. “[Aviva and QBE] have stronger wordings from a policyholder perspective.”
Many policies can be triggered by closure of a business due to the presence of a disease that has to be notified to public authorities. Ms Campbell said that QBE’s policies offered a wide definition of what was meant by a “notifiable disease”.
Aviva’s policies, she said, could be triggered by the “actions or advice of governmental authority”. Pubs and restaurants argue that they were forced to close by the government, so their claims should be paid.
QBE declined to comment.
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Aviva said its “standard terms and conditions for business interruption do not cover claims relating to the current pandemic. However, a small number of Aviva customers may have purchased cover through a broker or scheme that is not on Aviva’s standard terms and which may provide cover.”
HIGA plans to gather as many Aviva and QBE policyholders as possible before launching a class action against the two.
Almost a dozen action groups have been set up to push for the payment of business interruption claims, many of them targeting specific insurers. The Hiscox Action Group is the most high profile. It represents about 400 companies and has already secured funding for legal action, which it plans to launch this week. Other groups are focusing on Allianz and RSA.
The UK’s Financial Conduct Authority plans to launch a test case in the High Court in an effort to provide some clarity for insurers and their customers. The case is likely to be heard in July.