‘Nothing stopping’ resilience policy insurers paying out amid FCA test case ruling, says law firm

The law firm representing the hospitality industry bidding to secure business interruption payouts in the wake of the Covid-19 pandemic has called on RSA and other resilience insurers to immediately make payments to customers.

RSA has decided not to contest the FCA’s test case High Court ruling on its RSA4/resilience policy, and law firm Mishcon de Reya said this represents ”a significant step in the right direction for so many businesses”.

”RSA and the other Resilience insurers should now start making payments to affected businesses right away - there is nothing stopping them,” Sonia Campbell, the firm’s lead partner on the action said in a statement.

She is now calling on insurers using the same wordings to also such claims. 

HIGA (Hospitality Insurance Group Action) intervened in the FCA test case, and Mishcon de Reya said this had contributed successfully to establishing that there is cover in principle under the RSA4/Resilience wordings. 

”There has been mounting speculation that insurers would make applications to the Supreme Court to appeal the decision.

”Whilst many parts of the judgment may well be subject to an appeal to the Supreme Court, it is now clear that the Resilience wording will not be,” the law firm added. 

”Mishcon considers that insurers could still choose to deny significant elements of claims and advance other arguments to try to reduce the amount of loss payable to policyholders.”

It said that while other insurers with policies using the resilience wording are not technically bound by the test case ruling, they too should start making payments. 

Campbell said: “It is of course a huge win for large portions of the UK’s business community, which for so many months has been told by insurers that insurance policies do not cover losses relating to the Covid-19 pandemic; that is plainly wrong.

”The High Court has ruled that many policies do in fact provide such cover and it seems RSA at least has accepted that - given it is not appealing the High Court’s judgment in respect of the Resilience policy wording.”

“However, given the insurers’ approach to policyholders’ claims to date, businesses should not expect it to be plain sailing.

”Every policyholder has to prove its loss, and this is where we expect insurers to continue to frustrate the process; we will continue to try to support businesses to claim successfully from insurers.

“Given that we have been at the heart of the fight for businesses since day one, we continue to urge businesses to contact us if they find that their insurers are still refusing to pay claims that should be covered.”