Lawyers acting on behalf of major UK insurance companies have accused small businesses of trying to “reverse engineer” coverage for the COVID-19 pandemic.
At the start of a four day appeal in the Supreme Court on Monday, Gavin Kealey, a lawyer for insurer MS Amlin, said: “If these insurers wanted pandemic cover or epidemic cover on a national scale, then they didn’t get it... You can’t reverse engineer those cases,” according to Reuters.
Kealey and other lawyers are acting for major insurers in an appeal against an earlier ruling that found insurers were largely liable for payouts to small business customers forced to shut due to the national lockdown earlier this year.
Insurers had argued that business interruption clauses in coverage did not apply to national lockdowns, which were not foreseen when policies were written. They added that infectious disease clauses were meant to cover localised outbreaks rather than international pandemics.
The argument angered many small business customers, including celebrity chef Raymond Blanc who has had a public dispute with his insurer Hiscox (HSX.L).
The Financial Conduct Authority (FCA) mounted a fast tracked legal challenge on behalf of small businesses to gain clarity over the coverage. The High Court largely sided with small businesses in a ruling handed down in September.
Insurers are appealing the verdict in the Supreme Court. They say COVID-19 and national lockdowns were not foreseen when policies were written and therefore can not be covered. The industry also argued that a decision to allow payouts would be ruinous for many companies. Insurers are liable for payouts worth tens of millions of pounds.
The FCA and a small business pressure group are also appealing the High Court ruling, seeking more clarity on issues such as partial closure and reduced payments.
The four day virtual hearing began on Monday and is due to run until Thursday. The FCA will make its arguments on Tuesday.
WATCH: Small businesses hanging by a thread in the COVID economy