The Financial Conduct Authority (FCA) is presenting a major legal case against various insurers, on behalf of hospitality and event venues in the UK which are fighting for a payout.
Venues across the hospitality and events spectrum have struggled to receive payouts from insurance policies, after Covid-19 caused widespread cancellations and disruption. The FCA is combining a large number of these cases into one major group action lawsuit.
The aim is to combine a wide spectrum of policies into one representative case, which will go the High Court. If this representative case wins in the High Court, the trickle-down effect could potentially see many more similar, individual policies pay out for hospitality and event venues.
The stakes of the case are high for both the hospitality/events sector and the insurance sector, both of which have been heavily affected by Covid-19.
Who is involved in the case?
The FCA is working alongside the Night Time Industries Association (NTIA) & NDML Insurance Broker and their members, which constitute live music venues, clubs, pubs and bars across the UK. If the representative case wins in the High Court, however, it could have positive ramifications for the entire hospitality and events sector.
Matt Brewis, Director of General Insurance at the FCA, provided updates on the case alongside Legal Council Paul Smith. They were questioned by Philip Kolvin QC, previously Chair of London’s Night Time Commission, who is working alongside the NTIA as a legal advisor.
These groups joined for a Zoom call to answer questions from policy holders, so they could make a decision about whether they want to wait for a decision in the FCA case, or go it alone and appoint their own lawyers to fight for a payout.
One policy holder asked why only eight insurance companies had agreed to work with the FCA on the case, considering there are many more than that in the UK. Brewis said this was not because insurers were unwilling to cooperate, but because working with a representative sample of eight major insurers would get the case to a useful result as quickly as possible.
However Juliette Levy, a Barrister and Director of Cerulean Law – a legal firm which is also involved in cases with insurers – said there was no guarantee that a successful case against these eight insurers would have the desired trickle down effect. Insurers would be likely to appeal an undesirable result however they can.
When is the case going to court?
Brewis said that the FCA case was being expedited in order to reach a conclusion as quickly as possible, and that going it alone would not necessarily mean a faster result.
He provided a timeline for the case, which he said was expected to go to court on or close to 20 July. A best-case scenario for payouts if the case won in court would be late August or September, although exact times are difficult to predict. “The FCA’s motive is one of speed,” said Brewis.
However, there are many factors at play. Courts go into recession in late summer, which could cause delays to a large group action lawsuit such as this one. In addition, there is a possibility that a second wave of Covid-19 could lead to an influx of new policy claims. If this were to happen, it could slow the process of securing payouts for the first wave of claims, which could be fatal for businesses that are currently closed or working at reduced capacity.
I’m a policy holder who has not been paid out – what should I do?
The case against insurers is a large and complex one. There are advantages and disadvantages to waiting for a decision in the FCA case, versus appointing your own legal team to try and secure a payout. Access would advise policy holders to seek legal advice before coming to any decision.
Full audio for the webinar can be found at this link.