Hospitality groups serve up lawsuits in Covid insurance battle

A lawsuit brought by the owner of London’s Wolseley restaurant against insurance group Axa in a dispute over cover for Covid-related losses is to be heard in the High Court in January, with implications for UK businesses that held similar policies.

Corbin & King, which also owns the Delaunay restaurants in central London, is suing the Paris-based insurer’s UK arm after it refused to pay out on a business interruption insurance claim made by the hospitality group.

The restaurant chain and the insurer are set to go to the High Court on January 24 for a closely watched case that will examine the scope of so-called denial of access cover — which compensates companies if their venues are shut by a statutory body because of a local danger — and whether it should have paid out due to pandemic shutdowns.

“This case is important because there are so many similar clauses in policies held by businesses across the country and it’s likely to be of significant general application,” said Roger Franklin, head of insurance litigation at law firm Edwin Coe, which is representing Corbin & King.

A list of businesses that have similar complaints lodged with their insurers has been shown to the court, according to a separate person close to Corbin & King.

The question of whether business interruption insurance should cover companies against Covid-19 losses, and to what extent, has been at the heart of a long-running dispute between businesses and insurers after repeated lockdowns from March 2020 forced pubs and restaurants to close.

Insurers have paid out around £1.2bn in compensation to companies under such policies after the UK’s financial regulator, along with eight insurers, brought a test case to the High Court last year seeking clarity for hundreds of thousands of policyholders. The Supreme Court ruled in January that in most instances the insurers should pay.

However the ruling did not cover the wording of every type of insurance policy and there has since been a flurry of legal claims.

Corbin & King’s denial-of-access claim is for around £4.5m, according to two people familiar with the matter.

Axa denies it on the grounds that an earlier High Court ruling in the Financial Conduct Authority case concluded similarly worded clauses only provided business interruption cover against the consequences of localised incidents, rather than on a national scale. This point was not appealed in the Supreme Court case — resulting in legal uncertainty.

The case will also determine if Corbin & King’s Covid insurance cover is limited to just £250,000 payable by Axa in respect of all premises, or whether there is a limit of £250,000 for each set of premises as Corbin & King argues.

Axa said it “continues to work with our customers and pay claims on policies where there is valid cover, as we have been from the start of the pandemic”, saying the total has already exceeded £86m. Corbin & King declined to comment.

In June, the High Court will also hear Slug and Lettuce owner Stonegate’s £845m case against MS Amlin, Liberty Mutual Insurance in Europe and Zurich over the extent to which the hospitality group can claim for Covid-related losses. The court will also examine whether furlough payments to the company can be subtracted from claims, according to two people familiar with the matter.

Stonegate, MS Amlin, Liberty and Zurich declined to comment.

Zurich is also being sued by Greggs for up to £100m for compensation that the bakery chain says it is entitled to under its business interruption cover after multiple lockdowns.

Zurich said it was “confident we have responded to [Greggs’] claim fairly and consistently with the test case brought against the insurance industry last summer”, and said it was an “ongoing legal issue”. Greggs declined to comment.