QBE, Aviva under attack from hospitality group over COVID-19 BI claims

Hospitality sector action group HIGA is planning to launch a possible legal action against UK insurers Aviva and QBE over unpaid business interruption claims.

HIGA has roped in Mishcon de Reya, a law firm which is also working with Hiscox Action Group in its court battle against global specialist insurer Hiscox.

Mishcon in conjunction with counsel, Philip Edey QC, of Twenty Essex Chambers, have reviewed over 500 business interruption insurance policies, submitted by applicants between April 29 and May 6, 2020.

HIGA has called for policyholders with these insurers and businesses in the hospitality industry, whose business interruption claims have been "ignored or thwarted" to participate in a group claim against QBE and Aviva. Such businesses may include hotels, restaurants, bars, pubs, nightclubs and leisure businesses.

The group stated that its legal team has determined the specific coverage clauses within policies underwritten by Aviva Insurance and QBE (UK), which HIGA is best advised to challenge through a group claim. The relevant policy wording for Aviva Insurance is its material damage & business interruption policy. For QBE, the relevant policy wordings are - Hotel Insurance Policy, Leisure Combined, Business Combined Insurance Policy and Nightclub and Late Night Venue Policy.

Meanwhile, Mishcon de Reya is in discussions with third party funders to secure funding for the costs of the litigation and expects to be able to move forward by June 10, with the aim of issuing a claim as soon as possible thereafter.

Sonia Campbell, partner and head of the insurance disputes practice at Mishcon de Reya, said: "We were overwhelmed by the expressions of interest in bringing actions against insurers from within the hospitality industry – demonstrating how hard-hit this sector has been as a result of the government-enforced lock-down and how intransigent many in the insurance industry have been towards their policyholders."

Campbell added: “The decision to limit a potential HIGA legal challenge to just two insurers with specific wordings was always going to be difficult and we recognise many HIGA applicants will be disappointed we are unable to act for them. However we have sought to protect their rights by contacting the FCA on their behalf, potentially affording them the opportunity to engage with the test case the FCA is to bring against as yet unspecified insurers. We wish this cohort every success.

"Whilst we are unable to act for all HIGA applicants, we do consider that many of these policyholders may want to explore other avenues of redress, including through the FCA and the Financial Ombudsman Scheme. Meantime, we are contacting those HIGA applicants insured by Aviva and QBE and inviting them to confirm their continued interest in participating in a group claim.

“We also encourage any other business in this sector - with a specifically-worded business interruption policy underwritten by Aviva or QBE - to contact us by no later than Friday 5th June should they wish to consider participating in HIGA’s group action. We believe this is the best way to ensure some financial recompense for these policyholders following their sudden and enforced closure."