COVID-19 pandemics has triggered insurance claims based on business interruption and other relevant policies all over the world. In this alert we would like to:
- invite you to participate in a poll aimed to examine policyholders’ experience in dealing with pandemics-related insurance;
- inform you on the recent UK Supreme Court landmark judgment regarding application of business interruption policies coverage to the COVID-19 related financial losses; and
- update you on some developments in Russia regarding insurance coverage of the COVID-19 related financial losses.
1. Invitation to participate in a poll aimed to examine policyholders’ experience in dealing with pandemics-related insurance
If your company had an insurance policy that covered or should have covered the pandemics-related risks, we invite you to participate in our poll. The poll will be held among our clients in 11 European jurisdictions, including Belgium, France, Germany, Netherlands, Poland, Russia, Sweden, Switzerland, Turkey, UK and Ukraine.
The poll will be open until 28 February, and upon its completion, we will be happy to share the results with you. Needless to say that the responding companies’ names will not be disclosed; furthermore, you may respond on a no-name basis if you would prefer to.
The poll is available through the link here.
2. UK Supreme Court landmark judgment regarding application of business interruption policies coverage to the COVID-19 related financial losses
Recently the UK Supreme Court has handed down a landmark judgment in the COVID-19 Business Interruption (BI) insurance test case brought by the UK Financial Conduct Authority (FCA), providing much-needed clarity regarding the coverage generally afforded to businesses for their COVID-19 related financial losses, and establishing a starting position from which BI claims can proceed to assessment (or reassessment) and settlement. The judgment considers issues of principle on policy coverage under 21 sample policies underwritten by eight leading providers. The Supreme Court held that:
- “notifiable disease” clauses specifying a strict geographical area may be triggered by a single person within that area falling ill with COVID-19;
- public authority instructions to close insured premises need not have the full force of law to trigger cover;
- the partial closure of insured premises may be sufficient to trigger cover; and
- it is irrelevant that COVID-19 related losses may have been suffered in any event (for example, due to people being instructed to stay at home).
The position in which policyholders now find themselves will be clearer for some than for others; policyholders should examine their own policies, each of which will require careful review against the Supreme Court’s detailed analysis. The FCA anticipates that a further 700 types of policies, across 60 insurers and held by 370,000 policyholders, may be impacted by the Supreme Court’s judgment.
Looking beyond COVID-19, the Supreme Court and High Court judgments provide useful insights into the scope of BI cover afforded for other perils, such as environmental disasters, “acts of God” and potentially, political unrest and war. The judgments also add to the interpretation of “event”, “occurrence”, “incident”, and “competent local authority”.
For further detail, please see our alert here.
3. Developments in Russia on insurance coverage of the COVID-19 related financial losses
In Russia, there have been no developments similar to those in the UK, and no established court practice has yet emerged. To date, we identified only one court case that has passed through at least an appellate stage where the insured claimed COVID-19 related losses to its business from the insurer based on the policy.
In case No. A40-119472/2020, the insured claimed on the basis of a property insurance policy for the losses caused by deprivation of the leased premises due to COVID-19 restrictive measures. By its judgment of 29 October 2020, the Arbitrazh Court of the City of Moscow dismissed the claim, holding that such deprivation of the leased premises was not an insured event under the policy. On 21 January 2021, the Ninth Arbitrazh Appellate Court upheld the judgment. The case, however, can still further be appealed to the cassation court.
We will keep you informed on further developments.