Everyone will know that Coronavirus has caused and is causing substantial loss and distress to SME’s and large businesses alike and many have already shut up or under immense financial strain to stay afloat.
by Victor Cherubim
With UK crashing into its deepest recession of any major economy, we also see the UK holding the record for having administered the largest number of vaccinations around the world. According to statistics, 2.9 million of the UK population have already been vaccinated up to date.
The economic shock triggered by the COVID-19 pandemic has caused the GDP to fall by 8.2% below the level seen in February 2020. At the same time, we are seeing signs of the Kent variant of the pandemic, known as 202012/01, under control.
According to new research from Cambridge University, the “R” rate is dropping “below 1”in the 22 London Boroughs. This according to research is a sign that the virus may have peaked in early January 2021, as in some parts of England the “R rate” could be as low as 0.6’.This is not all.
COVID-19 is not always bad news?
Today, 15 January 2021, small and large business are cheering a landmark Supreme Court ruling that appears set to force insurance companies to pay out on disputed corona virus business interruption claims worth at least £1.2 billion.
Everyone will know that Coronavirus has caused and is causing substantial loss and distress to SME’s and large businesses alike and many have already shut up or under immense financial strain to stay afloat.
A test case involving complex legal and insurance cover issues was brought to the Supreme Court, by the Financial Conduct Authority, (FCA) the business regulator in UK, against six large Insurers, Insurance Companies, among them Hiscox and RSA on behalf of 370,000 policy holders.
In September 2020,The High Court in London had allowed that the policies issued by these Insurers did not cover most of the “Disease Clauses” as well as certain “Prevention of Access to Business Clauses” in their policy cover. This was a body blow.
Six Insured appealed against this decision, which was also taken up by the FCA on their behalf. The Supreme Court was asked to set the parameters for valid claims from various policies taken.
What was the case about?
Hundreds of thousands of businesses that were forced by the UK Government to close due to the First Lockdown, or faced significant losses made claims on their business interruption insurance. But leading insurance companies and insurers (brokers) disputed their claims arguing their policies did not cover the restrictions.
Supreme Court lights up Covid business interruption policy pay outs
Five Judges, headed by Lord Reed, President, Supreme Court in their 112 -page verdict today (15 January 2021) overruled the original High Court judgment, in favour of the policy holders.
The interpretation of four types of clauses
The Four Types of Policy Clauses and their wordings referred to for convenience as:
“Disease Clauses”, Prevention of Access Clauses” “Hybrid Clauses “and “Trends Clauses”.
Without going to at length to the legal interpretation of all these clauses, the public is aware of the Insurance industry always had relied on the small print in these Clauses.
The Companies who refused to pay claims to insured due to disruption to their business during Coronavirus, will now have to make certain interim payments wherever possible.
“The judgment should be a massive boost to all businesses reeling from a third lockdown who can now demand their claims are paid,” said Richard Leedham, Partner at Mischon de Reya who represented the Action Group who originally brought this claim against Hiscox. Many will remember this legal firm also represented the Royal Household and Princess Diana, years ago.
In fact, thousands of small businesses including many estate agents will now be due pay-outs after the Supreme Court judges ruled in policy holders’ favour on two key areas of argument. These are that “disease clauses” within business interruption policies can include COVID-19, and that agents who were told to close their branches by the government are due compensation.
Besides, “the Supreme Court agrees that inability rather than hindrance of use must be established but holds that this requirement may be satisfied where a policy holder is unable to use the premises for a discrete business activity or is unable to use a discrete part of the premises for its business activities.” The Supreme Court further interprets the wording requiring; “prevention of access” in a similar manner.
Landmark judgment
Readers will note that when I studied for my Institute of Chartered Shipbrokers exams in London, many moons ago, I was told by my tutor, that in our Ship Charter Parties the Clause interpretation “English Law” was often, in fact always, stipulated in drawing up the contract. Small wonder why in Sri Lanka we also sometimes refer to “English Law” in our Terms of Business. The reason is the clarity and precise interpretation of the terms of law and precedent.
Landmark Control mechanism in Corona Virus
Need I say, that in UK there is a paranoid belief in control of the strains of both the Kent and the Brazilian variant (501.V2) strain of Covid19 by vaccination. You would be surprised that Boris Johnson has opened a Vaccination Service at the historic Lichfield Cathedral, in UK. The pews in the Church have been removed and Vaccine cubicles have replaced. The “vaccine” has literally taken the place of “The Almighty”.
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