Alistair Handyside, chair of the Professional Association of Self-Caterers UK, said he was delighted by a judgment that would mean survival for many amid a third lockdown.
Some policyholders, however, are weary.
“It would appear we have won another battle this morning 10 months too late,” said Murray Pulman, who runs The Posh Partridge cafe in Dorchester, southwest England.
“The war is not over, however,” he said. “Getting payment, compensation and costs … is another whole new fight which begins today.”
Sonia Campbell, a partner at law firm Mishcon de Reya who represents a group of policyholders, said she would be seeking damages for late payment from QBE. The Australian-listed insurer was not immediately available for comment.
Hiscox, MS Amlin, Argenta and RSA said they would be paying claims as soon as possible. Arch stated that some of its policy wordings would now respond to pandemic claims.
Hiscox, whose shares dropped more than 5% before recovering, estimated its 2020 estimate for pandemic-related business interruption had risen by $48 million net of reinsurance, bringing total claims to 136 million pounds.
Barclays analysts said the ruling was negative for insurers but no “game-changer”.
The FCA said it would work with insurers to ensure they settled claims quickly and made interim payments if possible.
The case turned on the wordings of business interruption policies with clauses offering cover when insured premises cannot be accessed because of public authority restrictions, in the event of a notifiable disease within a specified radius and hybrid wordings.
Insurers said they were paying valid claims but that they could not provide limitless cover for losses when the bulk of an economy was shut down and people consigned to their homes in the toughest restrictions on public life since World War Two.
London’s High Court ruled last September that some insurers had been wrong to deny cover, prompting six insurers, the FCA and the Hiscox Action Group of policyholders to challenge elements of the ruling they had lost. The case leapfrogged the Court of Appeal because of its critical nature.
Christopher Croft, CEO of insurance brokers’ association LIIBA, said the industry’s reputation had been damaged. “We need to think hard about how we redress that,” he said.
($1 = 0.7348 pounds)
Reporting by Kirstin Ridley and Carolyn Cohn; Editing by Rachel Armstrong, Jane Merriman and Louise Heavens