Casinos, Gambling, and Business Interruption Insurance

Catrin Povey, an insurance lawyer at UK and international law firm, Capital Law, looks at issues the industry may face with its insurance cover

What’s the issue?

Business interruption insurance is intended to provide cover for financial losses where business operations have been interrupted due to unexpected events, as a result of damage to insured property. The coronavirus pandemic is definitely an unexpected event, and it has interrupted the operations of most businesses in the gambling industry, including casinos and betting shops, which were forced to close due to sanitation and contamination concerns. Yet, many have experienced difficulties in claiming and

accessing business interruption insurance. That’s because most standard policies are designed to cover damage caused by fire, flooding, earthquakes etc. and are unlikely to be triggered in the current circumstances. Even where policy extensions provide a wider scope of coverage, insurers are contesting that these were not intended to cover losses connected with pandemics. This pushback from the insurance industry, while

inevitable, is jeopardising the survival of many businesses across the sector which have been ringing the alarm bell. To seek clarity, the Financial Conduct Authority (FCA) – which regulates insurers – proceeded to bring a case against eight insurers (Arch, Argenta, Ecclesistical, MS Amlin, Hiscox, QBE, RSA and Zurich) in the High Court this summer.

34 NOVEMBER 2020 What did the High Court decide?

The trial was held at the end of the July and the decision was made public on 15 September. The case specifically looked at how a variety of clauses in business interruption insurance policies should be interpreted. The Court found in favour of the FCA (and therefore of the insureds, rather than insurers) with respect to most of issues considered. This included most disease clauses, clauses triggered by restrictions imposed on premises as a result of a notifiable disease, certain denial of access and public authority clauses, as well as causation and trends clauses.

On the face of it, the judgment seems like a huge win for casino and gambling businesses who filed a claim, but there are a few caveats to this result. First, the Court did not find in favour of the FCA across all policy wordings, as it preferred insurer arguments in relation to policies from Zurich and Ecclesiastical.

Second, the judgment is only binding on the eight

insurers which took part and was not clear cut on all issues. So, while the judgement will certainly be persuasive on other claims involving other insurers, the specific policy wording of each individual claim will need to be considered against the ruling, to establish whether there is cover. Third, the judgment is likely to be appealed.

Insurers including Arch, Argenta, MS Amlin, Hiscox, QBE and RSA are now entitled to apply to the Supreme Court for permission to appeal following a hearing held at the High Court on Friday 2 October. The FCA have said that they will continue discussions with the insurers to attempt to avoid the need for an appeal and enable pay-outs on eligible claims to be made as soon as possible. If no agreement is reached, then the Supreme Court is expected to consider the appeal by the end of the year.

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