Law firm Stewarts says that it has served particulars of a negligence claim against Marsh & McLennan Companies' flagship brokerage unit on behalf of 20 subsidiaries of Stonegate Pub Company Limited. The claim seeks more than £85 million in damages plus interest and costs.
The dispute centres on Marsh's handling of a large commercial insurance placement for the hospitality group's estate. Marsh was allegedly instructed to arrange insurance coverage for approximately 750 bars and pubs operated within the Stonegate portfolio.
According to the claim, Marsh negligently arranged a business interruption policy that named only Stonegate's parent company as the insured party, excluding the subsidiary entities. This administrative error meant that 209 of the pubs in the group's portfolio had no business interruption insurance protection whatsoever.
During the COVID-19 pandemic lockdowns, Stonegate reported approximately £1 billion in losses across its operations. However, the group was restricted to recovering a single policy limit across all its losses rather than receiving separate policy limits for each subsidiary.
Elaina Bailes, partner at Stewarts and the lawyer leading the case, said: "These circumstances impact the hospitality sector more heavily than others, with a number of businesses being left with no alternative than to take legal action against their insurers in the wake of the pandemic. It will give rise to questions on how brokers handled the placement of complex BI cover pre-COVID."
The error underscores recurring challenges with business interruption coverage, with research presented at the 2025 Financial Lines Forum in Zurich identifying business interruption as the most problematic area of commercial claims, citing frequent disputes over both claim resolution timelines and disagreements regarding claim size itself.
A previous commercial court judgment involving test cases defended by Allianz, Aviva and Liberty Mutual determined that policyholders with composite policies are entitled to separate indemnity limits per premises rather than per claimant, a distinction that would have substantially altered Stonegate's recovery position had Marsh structured the policy correctly.
Meanwhile, the hospitality sector continues to grapple with substantial business interruption exposure, with claims for weather-related property damage and business interruption reaching £109 million in 2025, up £7 million year-on-year.
Yet despite these challenges, the market has begun to stabilise, with additional carriers re-entering the hospitality space after pandemic-driven withdrawals, though underwriters continue to prioritise claims history as a critical consideration.
Insurance Business reached out to Marsh but it declined to comment.
