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NTIA welcomes Supreme Court ruling on business interruption insurance

By | Published on Monday 18 January 2021

Night Time Industries Association

The Night Time Industries Association has welcomed a ruling in the UK Supreme Court last week regarding insurance payouts to companies negatively impacted by the COVID pandemic, although it added that it is still processing the judgement to figure out exactly what it means for its members.

During the original COVID lockdown, the NTIA and others criticised a number of insurers for refusing to pay out to companies that had business interruption policies which – those companies argued – should have kicked in as soon as the government ordered high street business to close their doors in a bid to combat the spread of the coronavirus.

Responding to that criticism, the UK’s Financial Conduct Authority took eight insurers to court to basically get a judicial opinion on how various common phrases in insurance policies should be interpreted in the context of COVID-19. Of particular interest were phrases relating to business interruption caused by disease or government measures that force temporary closure.

The FCA hoped that its action would provide clarity on the various common phrases it had identified, to save each individual policyholder that had been denied a business interruption payout from having to separately fight their claim through the courts.

The High Court made its ruling back in September, in a judgement that then FCA interim CEO Christopher Woolard said was “a significant step in resolving the uncertainty being faced by policyholders”.

Both insurers and the FCA then appealed that ruling, with the Supreme Court reaching its conclusions last week. In the main, the top court allowed the FCA’s appeal but dismissed the appeal made by the insurers, which is good news for those companies who, based on the original High Court ruling, can no longer be denied payouts on their business interruption policies.

Welcoming last week’s judgement – which should benefit venues, clubs and other night-time businesses – the NTIA said in a joint statement with insurance broker NDML: “We are pleased that the Supreme Court has provided a positive assessment of a number of insurance policies that will affect our clients”.

“However”, they added, “we also know that the devil is in the detail and therefore we are currently engaged in a meticulous reading of this judgement in order to ensure that we provide as many clients as possible with the maximum available coverage in light of the Supreme Court’s directions”.

NTIA boss Michael Kill said on Friday that the judgement was a “moral victory” for those businesses denied payouts from insurers when such payments should have been made. “We are extremely pleased that the Supreme Court has dismissed the insurers appeal claims and supported the rights of thousands of businesses to be able to claim against there business interruption insurance”.

While confirming that he and NDML were still going through the detail of the judgment and how it will impact on different kinds of policies, Kill urged insurers to now do the right thing and make payments to those favoured by the court rulings as quickly as possible.