Insurers Win Key Aspects of Stonegate COVID-19 Lockdown Case

LONDON —Insurers have won key parts of a complex legal battle with British pubs group Stonegate, MS Amlin said after Monday’s judgment on the 1 billion pound ($1.13 billion) lawsuit against three top insurers over losses related to coronavirus.

Insurers have already paid out more than 1.5 billion pounds in compensation to thousands of small businesses that had to close or restrict trading to curb the coronavirus, after Britain’s markets watchdog won a test case against the insurers.

But not all policy wordings were covered by the test case and, where they were, some businesses disputed payout levels, leading to further court cases.

Stonegate had argued in a case against MS Amlin, Zurich Insurance and Liberty Mutual that its 760 insured pubs, bars and night clubs had each faced separate challenges in the pandemic, opening and shutting at differing times according to regional rules — and seeing business drop by up to 90% below projections.

Insurers accepted Stonegate’s businesses were covered by their policies, but said cover was limited to one business interruption payment of 2.5 million pounds, which had been paid.

There were just two separate events triggering business interruption payments, Monday’s judgment found. In addition, Stonegate could not claim where losses were covered by government furlough payments, it said.

“We welcome the judgment of the High Court, and believe this brings some genuine clarity to a very complex business interruption case,” Johan Slabbert, Chief Executive Officer, MS Amlin Underwriting Limited, said.

“This is a positive outcome for us and is of significance to the entire insurance industry … as issues around furlough payments and aggregation (total losses over a period of time that are not limited to single occurrence) in particular have the potential to have an enormous financial impact for insurers throughout the UK.”

Stonegate will appeal some aspects of the case, a Stonegate spokesperson said in an emailed statement, adding the judgment was “far from conclusive.”

“We believe that the court’s interpretation on a number of issues which are generally applicable to policyholders is out of step with the approach taken by the Supreme Court in the test case and with the approach of courts in other jurisdictions,” the spokesperson said.

Separate judgments on Monday in similar cases totalling more than 100 million pounds brought by Greggs against Zurich Insurance and Various Eateries against Allianz also largely benefited insurers, said Peter Hardy, partner at law firm Reed Smith, which was not directly involved in any of the cases.

Liberty declined to comment. Zurich said it was reviewing the Stonegate judgment and did not respond to a request for comment on Greggs.

Greggs’ lawyers said the Greggs judgment “substantially accepts” the sandwich-to-pasty maker’s case.

Allianz’s lawyers said the court had found “largely in favor” of the insurer. Various Eateries did not immediately respond.