Briefing: False hope is no antidote - a business interruption appeal is still firmly on the table

Antidote

The world is devoting a lot of energy into finding a vaccine or ‘cure’ for Covid-19. We should know by now that false hope is not an antidote.

So yesterday evening and this morning it was disappointing to see some of the coverage of RSA’s decision not to appeal two of its Financial Conduct Authority business interruption test case wordings.

A selection of headlines this morning:

RSA, Hiscox and others drop appeal against Covid-19 business interruption insurance payout rulings.”

“Victory for small firms as insurers finally agree to pay out on business interruption policies”

“Six insurers drop High Court appeal against BI policy ruling.”

The problem is that the appeal, for now, is still well and truly still on. The only wordings we know are not being contested that were ruled as meant to pay out are two of RSA’s. It will go forward with an appeal on its two other wordings.

Some of this coverage more than likely originates with a press release sent out by the Hospitality Insurance Group Action, in which Sonia Campbell, the Mishcon de Reya partner leading the action on behalf of the group, hailed this as a “huge win for large portions of the UK’s business community”.

In its release the group clearly stated it was possible for insurers to raise defences on other grounds. And that other wordings still appeared to be being contested.

However, somewhere along the line this has been lost in translation, or rather pushed back as an afterthought. It is not factually incorrect that the six insurers involved in the case will not be appealing two RSA wordings. But they are not the only stakeholders in this legal action. And Arch, Argenta, Hiscox, MS Amlin and QBE appear to be pushing on with their own appeals, though Ecclesiastical and Zurich have bowed out.

There is still the possibility someone else might try to muscle in and take over an appeal. Several insurers, Allianz, AIG, Aspen, Aviva, Axa, Chubb, Liberty Mutual, Protector, RSA, QBE and Zurich included, are known to have a stake in the Marsh/Jelf resilience (or RSA4) wording.

Qatar Insurance Company subsidiary QEL may have taken a bruising and been told to pay costs when it attempted to intervene in the case earlier this month, on the RSA3 wording that RSA will be appealing, but the judges made clear that there would be an opportunity to try to get involved later should the incumbent insurer decide to accept the High Court ruling.

At the time, QEL’s attempt to intervene was described as “verging on abusive” and “far too late in one sense and premature in another”.

However, at the next stage, should an insurer wish to step into RSA’s shoes on the two wordings it is not appealing then the time may well be more ripe.

We all make mistakes. But it is irresponsible to play fast and loose with policyholders who have so much riding on this case.

Imagine seeing that headline yesterday evening or this morning and suddenly feeling full of hope that your business was getting thrown a vital lifeline, that your insurer was going to pay up and you would be able to keep ticking on over to survive continuing disruption.

The anxiety, the relief and the joy… Only to find that just two of the specified wordings are not being appealed, and that there is no guarantee anyone but RSA will play by the rules (though one major insurer appeared to have said it would be bound by the outcome, as per a hearing earlier this month).

Livelihoods are riding on this action. Lives could be too.

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