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Tue 15th Sep 2020 - High Court favours policyholders in FCA business interruption test case
High Court favours policyholders in FCA business interruption test case: Business interruption insurance policies with pandemic or notifiable disease clauses should be read as to cover covid-19, and claims should be met “in most cases”, the High Court has ruled. It follows a test case by the Financial Conduct Authority (FCA) on behalf of thousands of businesses that claim they should have been paid by insurers to cover closures during the pandemic. Many policyholders – including those in the hospitality industry – whose businesses were affected by the covid-19 pandemic suffered significant losses, resulting in large numbers of claims under business interruption policies. The FCA said its aim in bringing the test case was to urgently clarify key issues of contractual uncertainty for as many policyholders and insurers as possible. The FCA did this by selecting a representative sample of policy wordings issued by eight insurers. The FCA’s role was “to put forward policyholders’ arguments to their best advantage in the public interest”. In order to establish liability under the representative sample of policy wordings, the FCA argued for policyholders that the “disease” and/or “denial of access” clauses in the representative sample of policy wordings provide cover in the circumstances of the covid-19 pandemic, and that the trigger for cover caused policyholders’ losses. The judgment said most, but not all, of the disease clauses in the sample provide cover. It also said certain denial of access clauses in the sample provide cover, but this depends on the detailed wording of the clause and how the business was affected by the government response to the pandemic, including, for example, whether the business was subject to a mandatory closure order and whether the business was ordered to close completely. The test case has also clarified the covid-19 pandemic and the government and public response were a single cause of the covered loss, which is a key requirement for claims to be paid even if the policy provides cover. However, the judgment did not say the eight defendant insurers are liable across all of the 21 different types of policy wording in the representative sample considered by the court. Each policy needs to be considered against the detailed judgment to work out what it means for that policy. Policyholders with affected claims can expect to hear from their insurer within the next seven days. Christopher Woolard, interim chief executive of the FCA, said: “We brought the test case in order to resolve the lack of clarity and certainty that existed for many policyholders making business interruption claims and the wider market. We are pleased the court has substantially found in favour of the arguments we presented on the majority of the key issues. Today’s (Tuesday, 15 September) judgment is a significant step in resolving the uncertainty being faced by policyholders. We are grateful to the court for delivering the judgment quickly and the speed with which it was reached reflects well on all parties. Coronavirus is causing substantial loss and distress to businesses and many are under immense financial strain to stay afloat. Our aim throughout this court action has been to get clarity for as wide a range of parties as possible, as quickly as possible and today’s judgment removes a large number of those roadblocks to successful claims, as well as clarifying those that may not be successful. Insurers should reflect on the clarity provided here and, irrespective of any possible appeals, consider the steps they can take now to progress claims of the type that the judgment says should be paid. They should also communicate directly and quickly with policyholders who have made claims affected by the judgment to explain next steps. If any parties do appeal the judgment, we would expect that to be done in as rapid a manner as possible in line with the agreement that we made with insurers at the start of this process. As we have recognised from the start of this case, thousands of small firms and, potentially, hundreds of thousands of jobs are relying on this.” Night Time Industries Association chief executive Michael Kill said: “This verdict is just what we’ve been waiting for. The night-time economy has been one of the hardest hit by lock-down measures during the pandemic, and many businesses are grassroots, family-owned venues that are cultural cornerstones of towns and cities across the UK. The enforced lock-down since March has created unthinkable financial turmoil and stress for many business owners. This verdict gives some reassurance that these businesses will get the payments they deserve to help them survive this period.”

Domino’s to hire 5,000 more staff after delivery boom during lock-down: Domino’s Pizza Group has announced it will take on 5,000 new staff as delivery and takeaway sales surged during the coronavirus lock-down. New vacancies including chefs and delivery drivers and comes as the chain is said to have reported a 5% sales lift for the first half of its financial year. The 5,000 jobs boost comes on top of 6,000 positions that were announced during lock-down. Domino’s also said it would create 1,000 apprenticeship positions under the government’s Kickstart initiative, whereby those ambitious enough could secure a permanent role following a six-month placement. Chief executive Dominic Paul said: “It was a privilege to keep our stores open during covid-19 and to now be in a position to offer thousands more people the opportunity to become a Domino’s team member. We’re also delighted to have applied to support the government’s Kickstart scheme, offering young people the chance to get back into work and to build lifelong skills through our training programmes. Together, these, over, 6,000 new roles will help Domino’s continue to safely serve our local communities as we head towards the busy festive period.” The jobs have built on the trend of services that have been able to function through the pandemic, including supermarkets and delivery companies. And comes at a time when rivals PizzaExpress and Pizza Hut Restaurants have announced cutbacks.

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