HIGA: Why it’s more important than ever for hotels to stand together

There is no doubt that every single industry has been affected by the Covid-19 pandemic. The hospitality sector, however, has been one of the hardest hit especially during the national lockdown when hospitality businesses were ordered to shut. Within the hospitality sector, hoteliers may well have suffered the most. When the economy slowly restarted in the summer, many hotels weren’t able to benefit from the Government’s Eat Out to Help Out scheme, tourism remained suppressed, and now hotels in Tier 3 areas across the country have to shut yet again. During this difficult and unprecedented time, many hotels will have been desperately waiting for their Business Interruption insurance policies to pay out. They will have seen that the submissions of the FCA and Hospitality Insurance Group Action (HIGA) were successful in establishing cover in principle under a number of business interruption insurance policies. Amongst those that ought to be paying out are insurers that have used the so called “Resilience” and "QBE 1" policy wordings. But – whilst you may be insured under these policies – you are unlikely to have received any payments from your insurers. The Resilience (RSA4) policy wording is not being appealed to the Supreme Court. The delay in payment can therefore only be because the insurers remain determined to drag their feet. That is why hotel owners with a Resilience policy should join HIGA. HIGA was set up to fight for hotels and others to get paid the sums they are owed. It is partly because of the pressure brought by HIGA when intervening in the FCA Test Case that Resilience policyholders should now be able to press their insurers for payments. But now HIGA are hearing of new tactics from the insurers. They may have lost in Court in principle, but they still will not pay out because they are able to raise other defences to policyholders' claims. It is anticipated that insurers will argue over every single penny to be paid and drag the payment process out for as long as possible. HIGA is funded by Harbour, one of the largest litigation funders in the world, so claims under the "Resilience" and "QBE 1" wordings will be funded (subject to satisfying certain terms and conditions). The costs of engaging solicitors and accountants to pursue your claim on an individual basis may be prohibitive and that is a principal reason for joining a funded group. HIGA are moving quickly and are already pressing for payment from insurers. If you join, HIGA will do all it can to get your claim paid as quickly as possible. Indeed, with the new provisions of the Insurance Act, insurers that have been slow to pay may have to make additional payments to compensate policyholders for the delay. Battle will soon resume in the Supreme Court for appeals of other policies and issues of causation. The situation is therefore likely to get even more complicated. Joining HIGA should result in a faster settlement - filing as a group makes it quicker and easier for mediators, for example, to hear the case. A hotel could be waiting a long time before an insurer’s loss adjuster reviews their claim on an individual basis. Once a hotel becomes a HIGA member, they will also have access to expert legal advice and help at no extra cost. Whatever questions or concerns they have; they can get answers by joining HIGA. The battle to get insurers to pay out on business interruption insurance policies is coming to a head but HIGA can still help. If you are a hotel and want to join HIGA, please email higa@mishcon.com. We really are stronger together.