Cover feature
POLICY
MATTERS
written by Paul Cook
10
Paul Cook asks whether it is
the beginning of the end of
unreasonable legal clauses
COVID-19 HAS IMPACTED people and
businesses in many ways. While there have
been some positives, such as dolphins
appearing in the Bosphorous and pollution
levels decreasing, for most, the impact has
been adverse.
Event delegates, planners and event
service providers of all types have been
affected. Large or small, local or global,
profitable or charitable, organisations
everywhere have been on a mission to
survive. For an industry that is about
bringing people together, the sector has
suffered more than most.
For many businesses, the first place they
looked when the virus took hold was to
their insurance providers. They believed
that losses from the pandemic would be
covered and they would be provided with
some form of recompense.
But, for many seeking help, there was
none to be found.
Insurance policies have exclusions
on them, things such as fraud and war
are automatically excluded. So too, are
losses due to a communicable disease.
And that is a big problem as Covid-19 is a
communicable disease.
However, the Communicable Disease
Exclusion (CDE) is nothing new. It has been
in place for a number of years. If you look
at other communicable diseases, such as
foot and mouth disease, avian flu or SARS
you would discover that losses from them,
will also not have been paid.
Is it reasonable, however, for insurance
companies to use their exclusions at the
time of a global pandemic? Clearly some
exclusions such as fraud will always apply.
However, for communicable diseases is
there room for some adjustment?
In the UK this is being put to the test.
The Financial Conduct Authority (FCA)
is presenting a major legal case against
various insurers, on behalf of hospitality
and event venues which are fighting for a
pay-out.
Venues in the UK across the hospitality
and events spectrum have struggled
to receive recompense from insurance
policies, after Covid-19 caused widespread
cancellations and disruption.
The FCA is combining a large number of
these cases into one major group action
lawsuit.
The aim is to combine a broad spectrum
of policies into one representative
case, which will go the High Court. If
this case wins, the trickle-down effect
could potentially see many more similar,
individual policies pay out for hospitality
and event venues.
The stakes of the case are high for both
the hospitality/events sector and the
insurance sector.
There is also pressure in other countries
on their insurance providers to help
alleviate the Covid-19 impact.
In the USA, Thomas Keller, a famous
restauranteur, has taken on the insurance
companies because none of them were
paying out on business interruption
claims. The suit, filed by attorney John
Houghtaling, requests that the court make
a legally-binding decision on whether
Keller’s policy allows him to recover
business losses sustained in connection
to the outbreak. The lawsuit was filed in
California.
On the East Coast, a bill being drafted
in the state of New Jersey could change
things dramatically for certain property
insurers in respect of business interruption
losses due to the Covid-19 outbreak.
If approved, the Draft Bill would take
immediate effect and essentially void any
virus exclusions such policies may have.
In Australia similar arguments with
insurance companies are in play. A number
of businesses could be saved if insurers
paid out because the business interruption
was caused as a result of government
shutdown. However, it’s not that simple:
some policies exclude loss by pandemic.
Also, there is a small issue of loss due to
quarantine being excluded.
In China, the position is different.
Insurance companies in China are
promising to cover business losses from
the coronavirus pandemic. Since February,
dozens of insurers have rolled out new
policies or expanded existing ones to
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