Hospitality action group to challenge Aviva and QBE on rejected Covid BI claims

Businesses within the hospitality and leisure sector are set to bring legal action against insurers Aviva and QBE for refusing to honour policies relating to business interruption (BI) losses due to the Covid-19 pandemic and associated lockdown.

The Hospitality Insurance Action Group (HIGA), which includes hotels, restaurants, bars, pubs and nightclubs that were forced to close as a result of government advice surrounding the coronavirus outbreak, has confirmed that its legal representative – law firm Mishcon de Reya – has advised a group claim against insurers Aviva and QBE.

This legal advice is based on Mishcon de Reya’s review of more than 500 BI policies, submitted by applicants between 29 April and 6 May 2020.

The firm has determined that the specific coverage clauses within policies underwritten by Aviva and QBE are those which HIGA is best advised to challenge through a group claim.

The relevant policy wordings for Aviva relates to its ‘Material Damage and Business Interruption Policy’.

The applicable QBE policy wordings, on the other hand, are PHOT010419 (hotel insurance policy), PLSC010419 (leisure combined), PBCC170619 (business combined insurance policy) and PNML010119 (nightclub and late-night venue policy).

HIGA is now writing to all its applicants, inviting only policyholders with these insurers and specified types of policy wordings to confirm that they remain interested in participating in a funded group claim – only registrants with the specific policies detailed above will be eligible to participate in the intended HIGA-led group action.

Businesses not yet registered with HIGA who have experienced rejected BI claims from Aviva or QBE have until 5 June to join the group action.

Mishcon de Reya, which is working on HIGA’s case in conjunction with leading counsel Philip Edey QC of Twenty Essex Chambers, is in discussions with third party funders to secure funding for the costs of the litigation; the firm expects to be able to move forward by Wednesday 10 June, with the aim of issuing a claim as soon as possible thereafter.

Hard-hit sector

Sonia Campbell, partner and head of the insurance disputes practice at Mishcon de Reya, said: “We were overwhelmed by the expressions of interest in bringing actions against insurers from within the hospitality industry – demonstrating how hard-hit this sector has been as a result of the government-enforced lockdown and how intransigent many in the insurance industry have been towards their policyholders.

“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.

“However, we have sought to protect their rights by contacting the FCA on their behalf, potentially affording them the opportunity to engage with the test case the FCA is to bring against as yet unspecified insurers. We wish this cohort every success.

“Whilst we are unable to act for all HIGA applicants, we do consider that many of these policyholders may want to explore other avenues of redress, including through the FCA and the Financial Ombudsman Scheme.

“Meantime, we are contacting those HIGA applicants insured by Aviva and QBE and inviting them to confirm their continued interest in participating in a group claim.

“We also encourage any other business in this sector - with a specifically-worded business interruption policy underwritten by Aviva or QBE - to contact us by no later than Friday 5 June should they wish to consider participating in HIGA’s group action. We believe this is the best way to ensure some financial recompense for these policyholders following their sudden and enforced closure.”

QBE declined to comment.