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Insurers face significant increases in Covid-related payouts after Wolseley owner Corbin & King won a closely watched business-interruption case against Axa.
In a judgment handed down on Friday, the High Court ruled that the French insurer’s UK arm should pay out under a business interruption policy for losses the hospitality group incurred during repeated pandemic lockdowns in 2020, a decision expected to cost Axa up to £ 4.4mn .
Mrs Justice Sara Cockerill ruled in favor of Corbin & King and noted that the case affected “not just these litigants but a considerable range of other businesses”. She said “a number of disputes may well be short circuited” by Friday’s ruling. Edwin Coe, the law firm that represented Corbin & King, is also acting for other companies that are now expected to bring fresh claims.
The High Court examined the scope of Corbin & King’s so-called non-damage denial of access insurance cover – which compensates companies if their venues are shut by a statutory body because of a local danger – and whether the policy should have paid out due to pandemic lockdowns. It rejected the argument that Corbin’s claims were limited to just £ 250,000 in respect of all premises and supported Corbin’s contention that it was £ 250,000 per premises per closure.
Axa had argued it was not liable to indemnify the hospitality group because the insurance policy only provided “a narrow, localized form of cover” in respect of a “danger or disturbance” specific to the locality of the insured premises – rather than providing cover against a national situation. But Corbin & King argued its insurance policy did not have to cover a limited area as Axa had claimed.
The case is the first major insurance claim to come to court since a landmark ruling in 2021 found that in most cases insurers should pay up – resulting in policyholders receiving more than £ 1bn in compensation. However the 2021 Supreme Court case could not cover all types of policy wordings and so fresh lawsuits had been expected.
Hogan Lovells counsel Lydia Savill said the decision “increases very significantly” the sums that insurers will be liable to pay in similar cases, given that companies with certain policies can now expect to be paid out per Covid claim and per premises.
Jeremy King, co-founder and chief executive of Corbin & King, said: “I am not a confrontational person, but I felt that the hospitality business had been badly served by insurers during the pandemic and was determined to fight for justice – not only for Corbin & King but for our industry as a whole. ” The exact payout is to be determined during a loss adjustment exercise.
Axa said it noted the court’s decision and would give it “careful consideration”. “We have been working with our customers and paying claims on policies where there is valid cover since the start of the pandemic and we will continue to do so,” it said.
The Paris-based insurer has been working in various territories to settle a dispute with hospitality clients over their pandemic losses. More than 80 per cent of French restaurateur customers have accepted a compensation deal offered last year, its chief executive said this week.
The judgment comes during a boardroom battle for control of Corbin & King between Jeremy King and the group’s majority shareholder, Thai hotel conglomerate Minor.
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