A New Zealand insurance lawyer says the recent decision involving Britain’s Financial Conduct Authority (FCA) may cause an uptick in claim activity on this side of the world, though he says it’s too early to definitively predict the impact of the decision on overseas insurers.
In a test case against eight insurers, the High Court ruled that insurers had largely been wrong to reject tens of thousands of business interruption claims from small businesses which had been impacted by COVID-19 lockdown measures. Duncan Cotterill partner Jonathan Scragg (pictured) says that although the decision affects UK insurers with London market policies, the similarity of policy wordings across London and New Zealand could mean Kiwi businesses may now start bringing more business interruption claims of their own.
“The English High Court was asked to rule on how a series of business interruption wordings offered in the London market should respond to the pandemic,” Scragg told Insurance Business.
“The focus was on whether insurers should cover for business interruption happening as a result of the government’s lockdown measures. The decision is focused on wordings used in the London market and applied in Britain, but, that said, the wordings are used globally - and indeed, some New Zealand policies use very similar language.”
“It’s been an almost universal experience that most policies have an express exclusion in the event of a pandemic, and that’s been enough to cut out the majority of claims,” he continued.
“There have been two or three notable exceptions, but I’ll be interested to see if that FCA decision has any direct bearing on policyholders in New Zealand. At the moment, it’s just too early to tell.”
Scragg says that for his own practice, insurance-related litigation has continued to come in throughout both lockdowns - however, he says there haven’t yet been any disputes directly related to COVID-19.
“We’ve had a relatively steady flow of new instructions, both during the lockdown periods, and also subsequently,” Scragg commented.
“However, I’ve been kept busy with an ongoing stream of civil and insurance-based matters.
“Before the lockdowns occurred in New Zealand, we were involved in some work giving advice around an early response to business interruption and travel insurance-related issues that came out of COVID. Those tended to be for clients who had an international profile - but since the first national lockdown, we haven’t had a lot of directly COVID-related instructions.”
