Law firm looking to launch group actions against insurance companies over non payment

Michelmores says it is considering launching a series of group actions on behalf of businesses affected by the Coronavirus pandemic, following information that many businesses are still struggling to receive payments on their policies.

It is inviting expressions of interests from businesses whose claims have been declined, to join a group action. Insurers identified with having policies it believes may be relevant to the current circumstances include Aviva (in particular Resilience policies), Hiscox/Geo Specialty, NFU Mutual (in particular Commercial Select), New India Assurance and QBE.

"The Coronavirus pandemic has adversely affected numerous businesses across the United Kingdom,” says Garbhan Shanks, head of Michelmores' policyholder insurance team.

“Some have specific policy clauses (such as non-damage property business interruption or disease extension wording) which should cover business interruption losses, yet the insurers who offered this cover are declining claims.

“ We are considering launching a series of targeted group actions, with the aim of helping policyholders to receive the indemnity funds that they may be entitled to."

Last month, The Hospitality Insurance Group Action (HIGA) announced ​​it was preparing to launch a group claim against insurers Aviva and QBE over unpaid business interruption policies.

It comes after the group's legal advisor, Mishcon de Reya, working in conjunction with Philip Edey QC of Twenty Essex Chambers, completed a review of over 500 business interruption insurance policies, submitted by applicants between 29 April and 6 May 2020.

Michelmores is currently acting for claimants in a group who individually contribute a small fee, which it says allows an economy of scale so as to have sufficient funds in place to pursue insurers. 

Other group actions may attract third party litigation funders who will pay for all the legal costs, and any adverse costs insurance, should litigation or arbitration be necessary. Third party funders make this investment in return for a certain share of any damages awarded.

The law firm says it is tracking the progress of the recently announced, potential Financial Conduct Authority (FCA) action, which will seek to clarify the position for some policyholders. 

It is also liaising with the FCA about certain policy terms which they wish to see clarified by the High Court in their declaratory judgment.