A collective claim by group registrants is likely to run into tens of millions of pounds
Businesses within the hospitality and leisure sector have today teamed up to launch an industry-wide, collective group action bid against insurers that are 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) is for businesses – such as hotels, restaurants, bars, pubs and nightclubs – that have been forced to close as a result of government advice surrounding the coronavirus outbreak, yet their insurance companies have remained silent to enquiries or are not honouring policies that refer to business interruption losses.
Litigation law firm Mishcon de Reya has agreed to advise HIGA on the parameters of bringing a collective group action against a range of insurers. The firm has secured external funding to cover the policy review exercise and is working with Philip Edey QC of Twenty Essex Chambers.
There is no cost for businesses to register with HIGA in order to have their existing business interruption insurance policy reviewed by Mishcon de Reya.
A collective claim of this ilk against the insurance industry is likely to run into tens of millions of pounds, such is the extent of HIGA members’ estimated financial damage.
Sonia Campbell, partner and head of the insurance disputes practice at Mishcon de Reya, said:
“Hospitality sector businesses, large and small, have been particularly hard hit by the government-enforced closure during this pandemic and desperately need to mitigate their losses.
“In times of crisis they expect their insurance to respond. Yet I am hearing time and time again that insurers are either stone-walling, unfairly limiting or simply point-blank refusing to pay out under business interruption policies. This strikes us as something that is open to challenge.
“I look forward to assisting all members of HIGA in exploring the possibility of a group claim. There may well be some light at the end of this industry’s very dark tunnel.”
Mishcon de Reya is also working with the Hiscox Action Group (HAG), assisting businesses that have been refused BI claims from the insurer.
Business perspective
Dan Fox, managing director of Craft Locals and owner of three North London-based pubs, said that if his insurer doesn’t pay out on his BI claim, there will be a “devastating impact” on his business and nearby community.
“If insurers don’t come through, this will have a devastating impact on not only the business and its continued survival, but the livelihood of the fantastic team members that we employ and the local communities of which we form such an integral part,” he said.
“Right now, we’re hoping HIGA can help us get our insurers to do the right thing.”
Meanwhile Trevor Ayling, owner of five Renoufs Cheese and Wine Bars in Dorset and Hampshire, added that joining an initiative like HIGA provides a great opportunity for free support at a time when business financials are in dire straits.
He said: “In light of the difficult circumstances, we decided to claim on our insurance policy and have tried every way to get our insurer to respond – to no avail. A pay out on our policy would go some way to making reopening a reality, helping to secure Renoufs’s future.
“We are aware others are similarly affected and, like us, don’t have the money to fight when claims are ignored or denied, as legal support can run into hundreds of thousands.
“We jumped at being an early participant in what’s become HIGA; it meant we got our policy wording reviewed for free and the chance of fighting to recover at least a proportion of our losses.
“I will be urging others in the hospitality industry to look at HIGA – we need to stand united to be counted.”
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