The government advised leisure businesses to close voluntarily prompting a public backlash that firms won’t be able to claim for business interruption as it isn’t a closure order. The vast majority of companies won’t have bought cover that protects them in the event of business interruption caused by the coronavirus, according to experts. The Association of British Insurers (ABI) confirmed to Insurance Age: “Irrespective of whether or not the Government order closure of a business, the vast majority of firms won’t have purchased cover that will enable them to claim on their insurance to compensate for their business being closed by the Coronavirus.” Yesterday (16 March) the government recommended that people stay away from pubs, restaurants and bars and called on people to avoid all non-essential contact. People have also been guided to work from home where they can. However it did not order the closure of these public spaces. The trade body for insurers was responding to public speculation that the insurance industry was being protected by the government from paying out with many arguing that if closures were mandated that business interruption cover would kick in. Wrong According to the ABI this is a fallacy. The spokesperson continued: “Standard business interruption cover – the type the majority of businesses purchase – does not include forced closure by authorities as it is intended to respond to physical damage at the property which results in the business being unable to continue to trade.” Some commentators referred to Boris Johnson’s appearance at the British Insurance Brokers’ Association (Biba) conference last year. Biba defended its decision to hire Johnson as a speaker and committed to helping its brokers navigate this period of uncertainty. Perspective A spokesperson commented: “Our decision to have Boris Johnson speak at our 2019 conference was taken to provide an interesting and relevant perspective from a then backbench politician who was highly influential in the UK’s decision to leave the EU. What we are facing now as a sector is unprecedented. “The issues that the businesses of the UK are facing are real and very concerning. Our team is currently talking with other bodies and Treasury about the response of the industry and the advice we can give to brokers and their customers.” She referred brokers to the guidance the body had already produced: “We have already published advice to members to help them manage customer queries but every policy wording is different and the extensions to cover that may include pandemic situations are optional covers and also very in their application. We will do what we can to add clarity.” Extensions? For some clients the picture may be brighter if they have bought a suitable business extension. The ABI spokesperson explained: “A small minority of typically larger firms might have purchased an extension to their cover for closure due to any infectious disease. In this instance an enforced closure could help them make the claim, but this will depend on the precise nature of the cover they have purchased so they should check with their insurer or broker to see if they are covered.” Some insurers have already responded to questions about how they will deal with business interruption claims. Axa, which also pulled its attendance at Biba’s May conference due to the virus, confirmed that unless Covid-19 was specified on documents it would not cover it. NIG also stated that Covid-19 was not listed on its documents. Other providers including Zurich, RSA, and Ageas said they would deal with claims on a case-by-case basis and urged clients and brokers to check wordings.
