In a continuation of the ongoing dispute between the hospitality and insurance industries, the UK’s largest pub group Stonegate has revealed it is suing a trio of insurers for losses it suffered during the pandemic. According to the Financial Times (the FT), the company which is backed by private equity group TDR Capital, is seeking £845 million in a claim filed at London’s High Court against MS Amlin, Liberty Mutual Insurance Europe and Zurich.
Stonegate is arguing that an insurance policy covering business interruption (BI) and related losses has been triggered multiple times during the coronavirus crisis. According to the court documents, Stonegate said that the insurers do not dispute that the policies should have paid out, but rather contend their liability is limited to £17.5 million, of which £14.5 milliom has already been paid.
The FT noted that Stonegate has declined to comment on the suit.
The question of whether BI policies should pay out following multiple national lockdowns has been a contentious issue since the first shutdown in March 2020 and has resulted in multiple lawsuits.
The FT highlighted that another hospitality giant, Various Eateries (owner of the Strada restaurant chain and the Coppa Club), has also filed a £16.3 million lawsuit against its insurer Allianz in a dispute over its BI policy. According to the claim, Allianz contends its liability is limited to £2.5 million.
“I think that if [businesses] were genuinely paying an additional premium to protect them from epidemics and pandemics then the default response should be that insurers pay out,” the FT reported Hugh Osmond, the founder of Various Eateries as having said.
Meanwhile, Corbin & King (owner of London restaurants including The Wolseley and The Delaunay), and a group of hoteliers led by Black & White Hospitality (which operates the Marco Pierre White restaurants), are also pursuing claims against their insurers linked to COVID-19. The FT noted that the cases follow the ruling by the UK’s Supreme Court regarding BI policies.
“The Supreme Court case answered a lot of questions about standard [contract] wording and indeed as a result led to the settlement of many cases,” said David Greene, senior partner at law firm Edwin Coe said to the FT. “But there will remain cases where insurers will continue to disagree on wording or particular circumstances which will lead to disputes.”
Reporting on the court documents involved in the case, the FT noted Stonegate’s estimates that its total BI and related losses between February 2020 and April 11, 2021, reached £481 million and it projects that further losses from April 2021 to 2023 — the indemnity period under the policy — could reach £365 million.
Stonegate claimed it is entitled to business BI claims under policy clauses covering presence of a notifiable disease in the vicinity of its premises, and by claiming under denial of access to its premises and enforced closure.
The FT noted that Zurich has said it was not the lead insurer on the Stonegate policy, but it did provide some cover and had already made an interim settlement. Meanwhile, MS Amlin and Liberty Mutual declined to comment.
In its lawsuit, Various Eateries claims that each BI at its 10 premises “gave rise to multiple triggers of the disease clause (and therefore multiple covered events).”
The FT published Allianz and Various Eateries’ joint statement that they are “collaborating” to seek a judicial determination on matters relating to the insurance policy that were not resolved by the Supreme Court case.