Coronavirus

‘Absurd’ arguments used by insurers to skip Covid-19 payouts

UK insurers have claimed that government guidance to close sites at the start of the lockdown was no stronger than calls to eat more fruit and vegetables, in what is reportedly a bid to avoid payouts to businesses.

According to the Financial Times, a group of insurers have now been accused of using the “absurd” argument in a High Court test case which will decide whether billions pounds worth of claims on “business interruption” policies can be released.

The Financial Conduct Authority’s (FCA) lawyers said that the guidance to close shops issued in March held the same weight as legislation forcing the closure of premises across the UK.

However, the FT’s report stated that insurers believe business interruption policies cover specific damage to properties, or legal actions taken by authorities in response.

Leigh-Ann Mulcahy, on behalf of the FCA, told the court: “The government’s advice and its guidance was as much a restriction as any legislative measures…it was imperative in nature and it was backed by the implicit or explicit power to legislate if not complied with. And it was taken and obeyed as mandatory.”

She added: “The advice here was a world away from the government’s advice to eat five portions of fruit and vegetables a day.”

Some 370,000 could be affected by the outcome of the High Court case, according to the FT.

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