The leisure and hospitality industries are in turmoil. With the coronavirus pandemic still rife throughout the country, there is no definite indication as to when businesses within the night-time economy will be able to reopen. Many of these businesses have been left financially crippled by enforced closures, reliant only on the prospect of a Business Interruption insurance pay-out.
Despite these businesses having crystal clear clauses within their policy wording indicating full coverage, several big-name insurers have refused to pay out. NDML, alongside the Night Time Industries Association (NTIA), have fought tirelessly to raise awareness of the issue. Insurers have an obligation under Financial Conduct Authority (FCA) regulation to treat customers fairly. It is clear that denying pay-out for valid claims is unfair and, unless rectified, could result in the closure of hundreds of businesses.
Michael Kill, CEO of NTIA says: “We have teamed up with NDML Insurance specialist late night leisure brokers and Philip Kolvin QC, one of the industry’s leading barristers, to fight for fair treatment from insurers. We have heard countless stories where businesses have had written confirmation of cover from insurers such as Hiscox, and then their claim has been denied later down the line. It’s our responsibility to bring the industry together and share these injustices.”
Senate Group Limited’s story
Paul Keeling, owner of Senate Group Limited, is just one of the hundreds of businesses awaiting a fair claims pay-out from Hiscox. The company provides training sessions across the country, in addition to consultancy and security services delivered from its offices in Alsager. In February 2020, the business sought advice from Hiscox regarding what Business Interruption cover they had in respect of coronavirus. Hiscox confirmed in writing that Senate Group Limited would be covered for up to £100,000. Fast-forward to the present day, and Hiscox have now denied all claims relating to coronavirus, stating that its ““core policy wordings do not provide cover for business interruption as a result of the general measures taken by the UK government in response to a pandemic.”
This is understandably devastating for businesses who had previously received confirmation they would be covered. Many business owners are now left in limbo, either facing the prospect of a lengthy legal battle (and paying the legal costs associated with it) or leaving the fate of their business up to the likes of Hiscox.
Paul is now working with the NTIA and NDML action group to fight for a positive resolution. The group is made up of several industry leaders who are all working pro bono to support the industry, working tirelessly to ensure the voices of small business owners are heard.
FCA legal action
The FCA has now stepped in to take legal action against insurers, asking the court to examine Business Interruption insurance policies to clarify whether these policies must provide cover. The court case will undoubtedly support policyholders in finding a definitive resolve.
Paul Keeling, Owner of Senate Group Limited, says: “Hiscox’s £100,000 Business Interruption pay-out could quite literally make or break our business. We are now left waiting to see if insurers will come good on their previous promise of pay-out. If not, businesses like ours will be in serious financial trouble. It is simply not reasonable to put people in this position. Real businesses and livelihoods hang in the balance.”
Simon Mabb, Managing Director at NDML, says: “We welcome the FCA’s involvement in taking legal action against insurers. This will ease significant amounts of stress on individual policyholders, who had previously been looking to launch their own costly legal proceedings.”
“That said, we really cannot believe it has come to this. Legal action should not be a necessity in cases where the insurer has clearly confirmed cover, or even misled customers to believe they have cover for Business Interruption caused by the coronavirus pandemic. This is diabolical behaviour and the unfair treatment of customers is a clear breach of FCA regulations. As the leading insurance broker for the industry, we see it as our duty to stand by businesses and offer a voice of protest against the way certain insurers are handling the situation. The future of thousands of businesses, not to mention the reputation of the insurance industry, is at stake here and we must do all we can to find a swift, categorical resolution.”
What will the future hold?
There is currently no firm date on the horizon for the FCA’s court case and no major change in stance from implicated insurers. In already uncertain times, the added stress of not receiving pay-out for a valid claim is leaving thousands of business owners with serious doubts for the future. It is therefore vital that associations, businesses and indeed individuals stand together as one to save the night-time economy.
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