The hospitality industry is holding its breath. With pubs and restaurants across Scotland closing, warnings are rampant about a second coronavirus lockdown in England and Wales too – one that could put many businesses in jeopardy.
However, the industry shouldn’t be the only one with its nerves jangling – the insurance sector is likely to be on tenterhooks too.
That’s because a second lockdown is likely to trigger a “tsunami of new business interruption insurance claims” according to the Hospitality Insurance Action Group (HIGA). Noting the outcome of the recent FCA test case – currently open for appeal – which “made it clear that, subject to their policy terms, businesses mandated to close by the government may have cover under their business interruption policies,”, new government instructions are likely to prompt a second wave of claims.
“The new government measures will lead to a second wave of business interruption claims from businesses across the UK, before the insurers have even paid out in relation to the first wave of claims,” said Mishcon de Reya partner Sonia Campbell (pictured). “We would strongly recommend all affected businesses with Resilience or QBE 1 policies to get in touch so we can continue pressing insurers to make these payouts as soon as possible.”
Scotland’s First Minister Nicola Sturgeon has said that some licenced premises must close from October 09-25, with rumours that similar measures could be introduced in northern England as early as today.
“The announcement that pubs and restaurants are being forced to close yet again in central Scotland and possibly in parts of England on Monday is more devastating news for the hospitality industry,” Campbell said. “Many of these businesses have gone through substantial parts of the year with zero revenue and this seems to be happening again.”