Business Interruption Insurance Coverage- News from the UK

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It’s summertime, and temperatures are high. So let’s look at a hot insurance coverage issue: business interruption caused by the coronavirus.

 Do you know about the business interruption insurance coverage test case in progress in the United Kingdom? To create some consistency and avoid a litigation morass, the Financial Conduct Authority (FCA) has brought a test case, something like a declaratory judgment. The FCA regulates the UK financial services industry. Their work includes protecting consumers, stabilizing the financial services industry and promoting competition. Eight insurers have agreed to be bound by the test case decision. Some of those defendants, such as Zurich, Arch, and Royal & Sun Alliance, also do business in the United States. Also bound will be their managing agents and sales brokers and agents. Issues to be considered include what constitutes “property damage” under the policy and the effect of a pollution exclusion, the same issues coming up in lawsuits in the United States.

The outcome will be binding in the UK, but why should United States insurance professionals care?

Of course, the law applicable in the case jurisdiction controls, but this is a public, complex, deliberately considered judicial process interpreting policy language. Therefore, parties can expect other judicial bodies to take notice of it and find the outcome persuasive. To the extent that an insurer’s policy language is substantially similar across various countries, policyholders would reasonably expect their carrier to treat them equally, regardless of geographic location, assuming such an outcome is consistent with local law.
You can follow the proceedings at the test case official website and subscribe to updates.  Trial started on July 20 and at this writing is ongoing.

Quarantine Settlements

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You have an opportunity. Right now. While you are working from home. While you are most likely to be able to reach people by telephone and actually engage in a discussion about pending claims.
 

Look over your file inventory. Which are the claims with high monthly expenses?  What about the old dog claims that have been around forever? Would you like to close that in pro per claim?

Reach out to parties about settling pending claims. Offer to participate in a remote mediation. Video mediation lets parties negotiate jointly and also in separate caucus rooms without physically leaving their homes.

In mediation, people need not retreat from their stated negotiation positions, yet confidentially discuss a route to resolution with the mediator.

Claims are down, right? High unemployment means there are fewer people working and fewer people getting hurt. There are fewer cars on the road. Essential workers must still commute, but the rest of the population is mostly sheltering in place. But then there are those COVID-19 claims. Sickened workers are entitled to coverage. Small businesses are making claims on their business interruption policies. Open roads have encouraged reckless driving, which worsens the outcomes of the inevitable collisions.

Eventually, there is going to be an uptick in claims. The time to reduce the pending claims inventory is now.