In a landmark decision, the UK Commercial Court has ruled in favor of insurers Covea and Markel in a no-damage business interruption claim related to the coronavirus pandemic.
The dispute is between two insurance companies and their respective reinsurance companies, with Markel being a General Reinsurance AG and Covea being a UnipolRe designated activity company.
The ruling overturns an earlier arbitration decision favoring reinsurers and could set a precedent for ongoing disputes related to pandemic business interruptions. It also highlights the importance of policy language and interpretation when dealing with business interruptions due to the pandemic.
The decision considered two important issues: the meaning of “catastrophe” in real estate reinsurance and the operation of reinsurance time clauses. The court's decision suggests a broader interpretation of the language of these policies, potentially paving the way for a broader range of business interruption claims to be successful.
The reinsurers further stated that there was no “catastrophic” and, in particular, that the use of the word is inherent in the meaning of “catastrophic”, which is something that has the potential to cause physical damage. added.
The impact of this ruling could further impact the overall reinsurance market and significantly impact outstanding COVID-19 reinsurance recoveries.
The ruling could provide much-needed assistance to insurance companies facing a growing number of business interruption claims.
In its judgment, the court emphasized the need to balance the interests of insurers, reinsurers, and policyholders. This delicate balance is likely to become even more important as the insurance industry continues to deal with the complexities of business interruption caused by the pandemic.
The UK Commercial Court's judgment serves as a reminder of the enduring importance of policy language and its interpretation in an ever-changing risk landscape.
