High-profile UK hospitality groups are turning to the courts as they escalate a long-running battle to prove that their business interruption insurance should have paid out during coronavirus lockdowns.
Corbin & King, the owner of upmarket London eateries including The Wolseley and The Delaunay, plans to seek a so-called declaratory judgment — when the court is asked to rule on the meaning of a policy — in an attempt to secure a payout from its insurer.
Black & White Hospitality, the group behind the Marco Pierre White restaurants, is planning a similar application. Inception Group, operator of bars such as Bunga Bunga and Mr Fogg’s, said it will also seek a court ruling that its policy should have been triggered.
The willingness by the hospitality groups to continue the fight with insurers more than a year after the first lockdown, and as the UK economy gradually reopens, reflects the level of anger over the disputed cover.
The question of whether business interruption policies should have paid out because of the lockdowns has already reached the UK’s Supreme Court. A judgment in January found in favour of many policyholders after the Financial Conduct Authority brought a test case on their behalf.
Companies whose policies were not within the scope of the court’s judgment have taken encouragement from the ruling.
The implications of the Supreme Court decision “made it clear that we did have a very, very viable claim,” Jeremy King, Corbin & King chief executive, told the Financial Times. He declined to disclose the size of the claim it has made with French insurance group Axa.
“There is a great deal of anger in the trade that we’ve paid substantial premiums and [when] we need that support, we’ve been denied it,” King added.
Both Corbin & King and Inception had denial-of-access cover, a type of business interruption policy that protects companies against their venues being shut by a statutory body because of a local danger.
Inception co-founder Duncan Stirling said that since announcing its intention to take legal proceedings, the business, which is pursuing a £3m insurance claim against Axa, has been “contacted by many other businesses, so we are now considering whether to issue proceedings independently or whether to form a group action with others”.
Insurers highlighted an earlier High Court judgment that gave a narrower interpretation of denial-of-access policies.
Axa said: “The FCA test case considered these wordings in great detail and decided that those in line with the Axa wordings did not provide any cover. The decision was sufficiently clear for the FCA to decide not to appeal against the decision on these wordings, although they did appeal a number of other points relevant to different policies.”
It added: “Whilst we understand the challenging situation many businesses have faced, we feel it is wrong to try to suggest a different outcome from an appeal judgment that very specifically didn’t include these policies.”
The insurer said it would meet claims where there is valid cover, and had paid out more than £65m since the start of the pandemic.
Black & White Hospitality is leading a separate group of 18 hoteliers pressing Tokio Marine Kiln, a unit of the Japanese insurance group, for payouts on a similar type of business interruption insurance, which covered them for premises being shut down by a statutory body.
“The wording, we thought, was really simple,” said Rob Atkinson, the group’s legal director. He said the group was told by Tokio Marine Kiln this week that its policy only covered one-off incidents.
While the Supreme Court decision did not address B&W’s policy wording specifically, Atkinson said, the group had waited for the outcome in order to judge the mood of the court before pursuing its own proceedings.
“There is no question that businesses have ceased trading because they haven’t been able to access this insurance,” he added.
Tokio Marine Kiln said it was “working to ensure a fair adjustment and payment of all valid business interruption claims triggered by Covid-19 in line with the FCA test case judgments”.
“While we do not comment on individual claims, we sympathise with all our clients at what we know remains a very difficult time and our aim is to always be fair and expeditious in our processing of their claims.”