Preparing for Flu Season During the COVID-19 Pandemic

Each year, the seasonal flu has a marked impact on businesses and employers, causing increased absenteeism, decreased productivity and higher health care costs. The past few flu seasons have seen high hospitalization and mortality rates, which has public health experts fearing another deadly flu season.

Unfortunately, the 2020-21 flu season isn’t the only health crisis employers and employees have to address this year. The COVID-19 pandemic is still affecting the workforce, and the combination of another potentially bad flu season and the pandemic has public health experts worried.

As an employer, you are well-positioned to help keep your employees healthy and minimize the impact that influenza has on your business. The Centers for Disease Control and Prevention (CDC) recommends strategies to help employers fight the flu and talk to employees about what a flu season during the pandemic looks like.

Educate Employees on the Flu vs. COVID-19

Unfortunately, because the flu and COVID-19 are both contagious respiratory illnesses, some of the symptoms are similar. For example, common flu symptoms include the sudden onset of fever, headache, fatigue, muscle aches, congestion, cough and sore throat. All of those are currently considered symptoms of COVID-19.

One of the difficult aspects of the COVID-19 pandemic is that the symptoms are wide-ranging and vary in severity. Some with COVID-19 may experience little to no symptoms, while others may be severely ill and require hospitalization.

Due to the similarity in symptoms between COVID-19 and the flu, it may be difficult to determine whether an employee has the flu or COVID-19 without being tested. As such, it’s important to encourage employees to stay home if they are sick.

Consider allowing employees to work from home, if they’re healthy enough to complete their work or while they wait for test results, and encouraging employees to take paid time off if they need to. If an employee tests positive for COVID-19 and needs to take time off to recover, they may be eligible for leave under a multitude of federal and state laws.

Preparing Your Workplace for Flu Season During the Pandemic

There are a variety of steps employers can take to protect employees and prepare for flu season—which may include steps you’ve taken in response to COVID-19—regardless of whether employees are in the office or working remotely.

Here are some strategies to consider:

  • Host an on-site, socially distanced vaccination clinic—One of the most important steps for preventing the flu is to get an annual flu vaccination. The CDC
  • recommends that all people over the age of 6 months get a flu vaccine each year. Hosting an on-site flu vaccination clinic can help educate employees about the importance of vaccination and make it easier for them to get vaccinated.
  • Encourage employees to get the flu vaccine—If you choose not to or are unable to provide an on-site flu vaccination clinic, you can still emphasize the importance of vaccination to your employees and educate them about local opportunities to get vaccinated.
  • Disinfect and clean the office—Because the flu virus and the virus that causes COVID-19 can remain on surfaces long after they’ve been touched, it’s important that your business frequently cleans and disinfects the facility. Some best practices include:
  • Cleaning and disinfecting all frequently touched surfaces in the workplace, such as workstations, keyboards, telephones, handrails and doorknobs.
  • Discouraging workers from using other workers’ phones, desks, offices, or other tools and equipment, when possible. If necessary, clean and disinfect them before and after use.
  • Providing disposable wipes so that commonly used surfaces can be wiped down by employees before each use.
  • Implement and enforce social distancing protocols—Social distancing is the practice of deliberately increasing the physical space between people to avoid spreading illness. Social distancing best practices for businesses can include:
    • Avoiding gatherings of 10 or more people
    • Instructing workers to maintain at least 6 feet of distance from other people
    • Hosting meetings virtually when possible
    • Limiting the number of people on the job site to essential personnel only
    • Leveraging work-from-home arrangements and staggered shifts when possible
    • Discouraging people from shaking hands
  • Employee safety training—Ensure that all employees understand how they can prevent the spread of COVID-19 and the flu, taking into account:
    • Respiratory etiquette and hand hygiene—Businesses should encourage good hygiene to prevent the spread of respiratory illnesses like the flu and COVID-19. This can involve:
      • Providing tissues and no-touch disposal receptacles
      • Providing soap and water in the workplace
      • Placing hand sanitizers in multiple locations to encourage hand hygiene
      • Reminding employees to not touch their eyes, nose or mouth
      • Asking employees to wear a mask or face covering when social distancing is not possible
    • Staying home when sick—Encourage employees to err on the side of caution if they’re not feeling well, and stay home when they’re sick or are exhibiting common symptoms of COVID-19 or the flu.

These strategies may not be right for every organization. Depending on the nature of your business, you may need to implement additional prevention strategies. Contact Morris & Reynolds Insurance to discuss your organization’s situation.

For More Information

The combination of COVID-19 and flu season could have a significant impact on your business this fall and winter. Contact Morris & Reynolds Insurance and request employee educational materials regarding flu prevention, vaccination promotion and good hygiene to start protecting your business and employees today.

As has been the case since 1950, the professional agents and underwriters at Morris & Reynolds Insurance are happy to help you. Whether you have a question about this topic or need help with any form of insurance, please contact us at any time at 305.238.1000.

Flu Season and the COVID-19 Pandemic

The arrival of the fall and winter months signals many things, including the beginning of flu season. According to the Centers for Disease Control and Prevention (CDC), flu activity peaks between December and February. This means that the COVID-19 pandemic isn’t the only public health concern as we approach the winter months.

This combination has public health experts fearing a potential “twindemic” in surges of COVID-19 cases and another deadly flu season. As such, the CDC is urging the public to take action to avoid another deadly flu season and prevent further spread of COVID-19 cases.

Flu vs. COVID-19 Symptoms

Because both the flu and COVID-19 affect the respiratory system, it can be difficult to determine whether you have the flu or COVID-19.

The flu is most often associated with the sudden onset of fever, headache, fatigue, muscle aches, congestion, cough and sore throat. Most people recover within a few days to less than two weeks. Occasionally, complications such as pneumonia, bronchitis or other infections can occur. Seasonal influenza can cause serious complications for people of any age, but children and the elderly are more vulnerable.

The list of COVID-19 symptoms is vast, and the disease affects people differently, with some experiencing little to no symptoms and others experiencing severe illness. Generally, symptoms can appear two to 14 days following exposure to COVID-19. According to the CDC, the most common COVID-19 symptoms include:

  • Fever or chills
  • Cough
  • Shortness of breath or difficulty breathing
  • Fatigue
  • Muscle or body aches
  • Headache
  • New loss of taste or smell
  • Sore throat
  • Congestion or runny nose
  • Nausea or vomiting
  • Diarrhea

Because there is some overlap between the symptoms, it may be difficult to determine whether you have the flu or COVID-19 without being tested. As such, if you believe you have the flu or COVID-19, please call your doctor and explain your symptoms before going to a facility to seek care. Doing so will ensure that you receive the care you need without risking the spread of COVID-19.


In preparation for a potential twindemic this fall and winter, take these steps to protect yourself and loved ones:

  • Get the flu vaccine. The flu vaccine is your best chance of preventing the illness. Currently, the CDC recommends that anyone over 6 months of age receive an annual flu vaccine by the end of October. Talk to your doctor to learn more.
  • Avoid close contact with people who are sick, and stay away from others when you feel under the weather.
  • Practice social distancing, which means staying at least 6 feet away from others, when out in public.
  • Wear a protective face covering or cloth mask when out in public.
  • Avoid large gatherings, especially those that aren’t socially distanced and don’t require masks or face coverings.
  • Wash your hands often using soap and warm water to protect against germs. If soap and water aren’t available, use a hand sanitizer that’s been approved for use by the Food and Drug Administration.
  • Get plenty of sleep, stay physically active and drink plenty of water to keep your immune system strong.
  • Manage your stress and eat a nutritious diet rich in healthy grains, fruits, vegetables and fiber.

Click here to learn more about the CDC’s prevention recommendations for both the flu and COVID-19.

Take Action Today Do your part to stay safe during the COVID-19 pandemic and flu season. By taking action, you can help prevent the spread of COVID-19 and another deadly flu season.

As has been the case since 1950, the professional agents and underwriters at Morris & Reynolds Insurance are happy to help you. Whether you have a question about this topic or need help with any form of insurance, please contact us at any time at 305.238.1000.

Director’s & Officer’s Market Update

The market for Director’s & Officer’s Liability has been increasingly influenced by the ongoing ‘hard’ commercial insurance market as insurers tighten terms, reduce limits and increase their pricing. The COVID19 crisis and the litigation that has begun mounting has only added to those woes and with that in mind we are pleased to share an update on the market for this important coverage.

Our friends at the CRC Group brokerage, one of America’s largest and oldest insurance intermediaries, recently wrote the following article and with thanks to them for their fine work we are happy to share it with you at this time:

Pandemic Roiling D&O Marketplace

As the coronavirus pandemic continues to grow, the directors and officers of public and private organizations are facing risks on two fronts: the economic impacts of COVID-19 and litigation. Adding to the challenge is a hardening insurance marketplace.

D&O liability insurance was already undergoing a market correction before the pandemic, after years of poor results and growth in claims. The uncertainties that COVID-19 is bringing to all sectors of the economy will undoubtedly lead to further changes – not only in the form of higher rates, but also tighter terms and conditions, as well as additional exclusions.

These trends will make navigating a complex line of coverage even more challenging, but they are not unprecedented. D&O insurers similarly tightened their underwriting during the financial crisis in 2008, then eased coverage restrictions after the global recession ended.

Times of crisis historically make directors and officers more frequent targets of litigation, as plaintiffs scrutinize organizations’ decisions. Generally, D&O allegations tend to fall into three categories: disclosures, particularly for public companies; mismanagement, especially when companies post results or their share prices drop precipitously; and insolvency.

Even when a lawsuit is found to have no merit, organizations still must defend it, and those expenses can quickly mount.


The Securities and Exchange Commission has encouraged public companies to disclose the impact of the coronavirus on their operations and financial condition, even as the SEC notes the future impact is uncertain. But public statements can get companies into hot water, as recent litigation shows.

Several lawsuits naming organizations and their directors and officers have already been filed with allegations relating directly to the coronavirus pandemic.1 A sampling of lawsuits include class actions against:

  • Norwegian Cruise Line Holdings Ltd. In March, plaintiffs filed a federal securities lawsuit alleging, among other things, that the cruise line made false and misleading statements about the impact of COVID-19 on the company’s operations and business prospects. The lawsuit also cited media reports of leaked internal memos directing the cruise line’s sales staff to lie about the coronavirus.2
  • Inovio Pharmaceuticals Inc. Also in March, plaintiffs filed a securities lawsuit alleging the biotechnology company made false and misleading statements that it had designed a vaccine for COVID-19 in three hours. A research firm called on the Securities and Exchange Commission to investigate Inovio’s statement, suggesting it was “ludicrous and dangerous.”3


Conditions in the D&O marketplace began hardening early in 2019, as litigation rose, losses outpaced premium growth and insurers responded to years of financial pressure. Underwriters’ reactions to higher losses in any line of business can take the form of higher rates, tighter terms and conditions, or reduced coverage. Depending on circumstances, underwriters might exercise all of those options on a given account.6

With the coronavirus, CRC Group is observing several different actions in the D&O marketplace, including:

  • Insurers withdrawing quotes. Pulling quotes off the table is a sign that insurers are uncomfortable with the level of risk.
  • Exclusions added after quoting and before binding. This is highly unusual, and it signals that insurers are worried about profitability. Bankruptcy exclusions are likely additions.
  • Pandemic-specific exclusions. Most professional liability lines, including D&O and employment practices liability, exclude coverage for claims involving bodily injury. During the COVID-19 pandemic, the overwhelming majority of liability claims will surround consequential loss.

CRC Group has not yet seen any market exits or significant reductions in capacity for D&O risks at this time. We anticipate that the D&O marketplace will harden further as the impacts of the coronavirus become clearer.


Stay informed. 

Directors and officers need to ensure they receive timely and accurate information regarding their organization’s operations and financial activities. Management decisions based on faulty information could prove to be costly and prompt lawsuits alleging false and misleading statements.

Be cautious about public statements. 

More than 150 companies have so far announced disruptions of their supply chains and many have indicated they will report lower revenues as a result of the pandemic. Any public statements by an organization’s executive leadership regarding the impact of the coronavirus should be based on facts. Understating the impact of COVID-19 on revenues, supply chains and so on could come back to haunt the organization’s directors and officers.7

Seek expert advice. 

D&O risks are complex, and they require expertise in law, insurance and business to manage properly.

Maintain D&O liability insurance. 

D&O coverage generally is available in three forms: Side A, which provides protection when an organization cannot indemnify its individual directors and officers; Side B, which reimburses organizations when they indemnify directors and officers; and Side C, which covers the entity when the organization and individual directors and officers are named as co-defendants.

While the vast majority of public companies already purchase Side A difference-in-conditions (DIC) excess coverage, it is now more critical than ever for private and non-profit entities to add this valuable product to their current D&O programs. The Side A DIC product maximizes person protection of directors and officers for claims that are not indemnified.

As COVID-19 slows economic growth and forces businesses to make difficult financial decisions, the value of Side A DIC coverage will increase considerably.


  1. The marketplace is changing, as insurers continue to analyze their exposure to D&O claims from the COVID-19 outbreak.
  2. Higher rates, tighter terms and conditions, and additional exclusions are all in play.
  3. Further hardening in the D&O marketplace is likely as the coronavirus spreads.
  4. Triggers for D&O litigation may include public disclosures, management action or inaction, and insolvency, as early lawsuits during the pandemic suggest.
  5. Private companies are not immune from D&O litigation, even though they are not required to disclose financial information.

To learn more about the current D&O/Executive Liability market please find last month’s article from the Insurance Journal,  Directors & Officers’ Insurance Rates Surge on Fears of Coronavirus Litigation can be found here or you can contact our professional agents and Underwriter’s here at Morris & Reynolds as we are most happy to help. 305.238.1000.


  • Jason White is a Managing Director and National Leader of the ExecPro Practice, based in Los Angeles.
  • Garrett Koehn is Regional Director of CRC Group’s Western U.S. operations, based in San Francisco.


  1. “Insurers fret as company bosses face coronavirus legal claims,” Business Insurance, April 1, 2020; https:// face-coronavirus-legal-claims-Mayer-Brown-Inovio
  2. Eric Douglas v. Norwegian Cruise Lines et al., U.S. District Court for the Southern District of Florida, March 12, 2020;
  3. Patrick McDermid v. Inovio Pharmaceuticals, U.S. District Court for the Eastern District of Pennsylvania, March 12, 2020;
  4. “Class Actions During COVID-19,” The National Law Review, March 31, 2020; actions-during-covid-19
  5. Michael Drieu et al. v. Zoom Video Communications Inc. et al., U.S. District Court for the Northern District of California, April 7, 2020;
  6. “State of the Market: Directors’ and Officers’ Liability,” CRC Group, October 2019; Intel/post/state-of-the-market-directors-officers-liability
  7. “What Apple, Microsoft, GE and other U.S. companies are saying about the coronavirus outbreak,” Market Watch, March 22, 2020; coronavirus-2020-02-18

Department of Labor Issues Updated FFCRA Regulations in Light of Recent Federal Court Decision

On September 11, 2020, the U.S. Department of Labor (“DOL”) released a temporary rule updating certain FFCRA regulations.  The temporary rule is scheduled to be published on September 16, 2020 and will be effective immediately through the expiration of the FFCRA’s paid leave provisions on December 31, 2020. 

The temporary rule updates FFCRA regulations issued in April 2020 in response to a recent federal District Court decision which found four portions of the initial regulations invalid:  provisions related to whether the FFCRA applies if employers do not have work available for employees; the timing for which employees must request the need for leave; the definition of health care provider; and the availability of intermittent leave. 

While many anticipated that the DOL would appeal the decision, the DOL elected to reaffirm and clarify its position on some of these issues, while choosing to revise or update others. Thus, while the court’s order was limited to companies operating in New York (or potentially only those in the Southern District of New York), the DOL’s revisions to the regulations apply to all employers subject to the FFCRA (inside and outside New York). 

The District Court’s order and the updated regulations are discussed in more detail below.

New York Federal District Court Decision

Soon after the FFCRA regulations were implemented, the State of New York sued the DOL in the United Stated District Court for the Southern District of New York claiming the DOL exceeded its authority when it implemented several provisions of the FFCRA regulations. The District Court agreed in part and, in August, the court issued an order invalidating several portions of the FFCRA regulations.

  • Work Availability Requirement – The original regulations limited the availability of emergency paid sick leave and expanded FMLA leave to certain situations where the employer’s business is open or the employer has work for the employee, but employee is unable to work due to a COVID-19 qualifying reason.  The court vacated this requirement, making the FFCRA available even if the employer does not have work for the employee, such as situations where the employee is furloughed, or the business is closed.
  • Documentation – The FFCRA statute requires employees to notify an employer of the need for leave “after the first workday” during which an employee requires paid sick time; however, the initial FFCRA regulations required documentation to be provided to the employer before any sick time is taken. The court determined this was beyond the scope of the statute and vacated this requirement. The content of the documentation and the need for documentation was not eliminated, just the timing of when it must be provided.
  • Definition of Health Care Provider – The initial FFCRA regulations used an expansive definition of health care provider, which included individuals who work in support of health care operations, such as cleaning staff, food service professionals and cooks, maintenance workers, IT staff, or other administrative support staff who support health care operations.   The district court vacated the definition of health care provider, finding it overbroad.
  • Intermittent Leave – The initial regulations allowed employees to take intermittent leave in certain situations with employer approval/agreement.  The court found this inconsistent with the statute and rejected this aspect of the regulation as an impermissible limitation on the availability of intermittent leave. 

Updated Regulations

In the updated regulations, DOL reaffirms its regulations related to the work availability and intermittent leave requirements but provided further clarification or explanation of its regulations.  The DOL revised regulations related to the definition of “health care provider” and notice requirements.  The rationale and changes are discussed more fully below:

Work Availability

Specifically, for purposes of the work availability requirement, the DOL affirms that neither emergency paid sick leave nor expanded FMLA under the FFCRA may be taken unless the employer has work available for the employee (the “work availability” requirement).  The FFCRA statute provides that leave under the FFCRA is available if an employee is unable to work (or telework) “because of” or “due to” a qualifying reason under the FFCRA.  The DOL cites to U.S. Supreme Court authority that interprets “because of” or “due to” language to create a “but for” test or analysis. Thus, FFCRA leave must be the “but for” cause of the employee’s inability to work.  Furthermore, the DOL reasons that the plain meaning of the word “leave” in this context, and based on longstanding DOL interpretation, means that someone has to be absent from work at a time the employee would otherwise be working. Thus, the DOL stands by its original regulation and provides that an employee cannot take FFCRA leave if there was no work available from the employer for the employee to perform. 

Finally, the DOL explains that this requirement was intended to apply for all qualifying reasons under the FFCRA, not just those that were initially listed in the original regulations.

Intermittent Leave

The FFCRA is silent about the availability of intermittent leave, but as the DOL notes in the preamble to the updated regulations, the DOL was given broad authority to develop rules under the law.  Thus, consistent with FMLA regulations, the DOL interpreted the availability of intermittent expanded FMLA leave for employees working onsite similar to how it applies for purposes of FMLA, which may also require employer approval.  For emergency paid sick leave, however, there is opportunity for spreading COVID-19 in the workplace.  Thus, it would be contrary to the purpose of the FFCRA to allow someone to take emergency paid sick leave intermittently (unless caring for a child whose regular day care provider is unavailable due to COVID-19). Therefore, for employees working on-site, the DOL reaffirms its decision to only allow intermittent leave for expanded FMLA leave purposes.  The DOL confirmed, however, as originally provided, that intermittent leave may be available for any FFCRA qualified reason if an employee is teleworking, as there is no risk the employee would spread COVID-19 at a worksite.  In any intermittent leave context, however, permission from the employer is still required.

Health Care Provider Definition

In an effort to ensure the public health system could maintain its necessary function during COVID-19 pandemic, the FFCRA allowed employers to exclude employees who are “health care providers” or “emergency responders” from eligibility for expanded FMLA leave and emergency paid sick leave.

The DOL took an expansive approach in defining “health care provider” in its initial FFCRA regulations to ensure health care operations would not be hampered, such as ensuring maintenance to health care facilities, trash collection, food services for hospital workers, and other similar services.  The District Court found this approach to be overly broad and, therefore, per the District Court’s order, the DOL opted to revise its definition of health care provider.  In the updated regulations, health care providers include employees who are health care providers under existing FMLA regulations and “any other employee who is capable of providing health care services such as diagnostic services, preventive services, treatment services, and other services that are integrated with and necessary to the provision of patient care and, if not provided would adversely impact patient care.”

This could include a variety of health care practitioners other than doctors, including nurses, nurse assistants, medical technicians, and laboratory technicians.  The preamble and rule provide numerous examples of what would constitute diagnostic, preventive or treatment services, and services integrated with these that are necessary for patient care, such as bathing, dressing, or feeding patients, among several others.  Food service professionals, IT professionals, building maintenance workers, HR professionals, or other individuals who do not provide health care services even though their work impacts health care services are no longer included in the definition of health care providers.

Employees falling within the new definition of health care provider can work in a variety of settings including, but not limited to, hospitals, clinics, doctor’s offices, medical schools, local health departments, nursing or retirement facilities, nursing homes, home health providers, laboratories, or pharmacies.

Notice of the Need for Leave

In the updated regulations, the DOL clarifies that notice of the need for emergency paid sick leave must be provided as soon as practicable (instead of before emergency sick leave is taken), which is consistent with the position the plaintiffs took when they challenged the original regulations.

Additionally, the DOL revised the regulations regarding notice of expanded FMLA leave.  For a foreseeable need to expand FMLA leave, the employee must provide notice as soon as is practicable, which may mean the employee may have to provide advance notice of the need for leave if the facts and circumstances support prior notice.  Prior notice is not required for unforeseeable need for expanded FMLA leave.  Finally, the employer may require an employee to substantiate the need for leave as soon as practicable, which may be at the same time notice is provided.

The DOL also updated its FFCRA FAQ’s consistent with the updated regulations.


As mentioned previously, the DOL’s updated regulations impact all employers subject to the FFCRA, not just those with employees in New York. Thus, all impacted employers should familiarize themselves with the updated regulations and administer them accordingly moving forward. 

To the extent an employer has employees impacted by the revised regulations, such as individuals previously included in the DOL’s broad definition of health care provider or employees who were denied emergency paid sick leave for failing to provide advance notice, they should consult directly with counsel to discuss how to address those specific

Some Policies Should Have Paid Out for COVID BI Claims, UK Court Rules

The impact that COVID-19 has had on businesses all around the world has been, simply stated, devastating. Property insurers have, thus far, nearly universally declined business interruption claims caused by the possible contamination from the virus to one’s property or the fact that governments (civil authorities) in many jurisdictions required many businesses to close for a period of time. In some cases the insurers have also sighted the existence of what is a common exclusion for damage caused by ‘virus or bacteria’ perils. Here at Morris & Reynolds we have encouraged our client’s to file claims with their insurers so as to determine their insurer’s exact position. We also continue to follow a variety of COVID-19 business interruption court cases all over the world as businesses test coverage declinations from their insurers through their local courts.

With these mounting court decisions in mind the recent ruling in what is being called a ‘test case’ from a London High Court this week is very interesting. In a case brought by the UK Financial Conduct Authority (FCA), a regulatory body that oversees nearly 60,000 financial services firms and  markets including 1,500 banks, credit unions, insurers and investment firms, the High Court reviewed nearly two dozen insurance policies from eight insurers written in the UK. And while the FCA acknowledged that most policies written in their country exclude losses from a pandemic bit focused on areas of ambiguity within the legal wording of the various policies and rightfully take the position that policy-holders deserve clarity in how those contracts are written. In a decision that could help businesses around the world the justices ruled that while such losses were not covered in some contracts many of the policies should have paid for COVID-19 claims.   

Christopher Cross, the CEO of the London & International Insurance Broker’s Association, commented about the 162 page ruling by stating the following:

“Clients deserve clarity, and the fact that this case had to take place at all is a rebuke to our industry and the often obscure language we use. Customers deserve to understand exactly what it is they are getting in language they recognize. The swift action taken by the FCA to bring clarity after the fact is to be commended. Many other countries are looking on with interest as their BI cases grind slowly through their legal systems.”

We could not agree more with Mr. Cross’ comments and while it’s possible that this ruling will be appealed it is most certainly worth following its ongoing evolution not only for businesses in the UK but around the world including here in the United States. You can read a Breaking News article on this ruling from Advisen below and within same find a copy of the actual ruling itself from the London High Court.  Here at Morris & Reynolds we will continue to follow this and other such cases closely. Our professional agents and underwriters are happy to answer any questions that you might have on this topic, help you file a claim for your business or assist in any manner that you might need. 305.238.1000.  

Some policies should have paid out for COVID BI claims, UK court rules

By Erin Ayers, Advisen

Policyholders in the United Kingdom claimed a win after a London High Court ruled that some insurers should not have denied thousands of claims for business interruption losses caused by the COVID-19 pandemic.

In a test case brought by the UK Financial Conduct Authority (FCA), the High Court of Justice evaluated 21 different policy wordings used by eight insurers. While not all language was deemed to provide coverage for non-damage business interruption losses, many of the policies examined should have paid out, according to the justices.

Arch, Argenta, Ecclesiastical, Hiscox, MS Amlin, QBE, Royal & Sun Alliance, and Zurich agreed to be part of the FCA’s test case and to be bound by the results, although the ruling could be appealed. Some policies, including those by Zurich and Ecclesiastical, held up to the court’s scrutiny.

The FCA had estimated that about 370,000 policyholders could be affected. The financial regulator agreed that most policies in the UK insurance market expressly do not cover pandemics but identified some areas of ambiguity. The policy provisions at issue largely address non-damage business interruption clauses that in some cases specifically covered diseases and in others covered prevention of access to the insured premises.

“We brought the test case in order to resolve the lack of clarity and certainty that existed for many policyholders making business interruption claims and the wider market,” said Christopher Woolard, FCA interim chief executive. “We are pleased that the Court has substantially found in favor of the arguments we presented on the majority of the key issues. Today’s judgment is a significant step in resolving the uncertainty being faced by policyholders.”

He added, “Insurers should reflect on the clarity provided here and, irrespective of any possible appeals, consider the steps they can take now to progress claims of the type that the judgment says should be paid.  They should also communicate directly and quickly with policyholders who have made claims affected by the judgment to explain next steps.”

Woolard said that if any insurers appeal the ruling, it should be done as quickly as possible, bearing in mind that “thousands of small firms and potentially hundreds of thousands of jobs are relying on this.”

The Association of British Insurers (ABI) said insurers had supported the court process initiated by the FCA and commented that the judgment “divides evenly between insurers and policyholders on the main issues.”

“The national lockdown was an unprecedented situation that posed understandable questions of interpretation for some business insurance contracts,” said Huw Evans, ABI director general in a statement. “Insurers always regret any contract dispute with their customers and will continue to reflect on feedback from recent events.”

He added, “This is a complex judgment spanning 162 pages and 19 policy wordings and it will take a little time for those involved in the court case to understand what it means and consider any appeals. Individual insurers will be analyzing the judgment, engaging with the regulator, taking account of the appeal process and keeping their customers informed in the period ahead.”

Christopher Croft, CEO of the London and International Insurance Brokers Association (LLIBA), commented on social media, “Clients deserve clarity, and the fact that this case had to take place at all is a rebuke to our industry and the often obscure language we use. Customers deserve to understand exactly what it is they are getting in language they recognize. The swift action taken by the FCA to bring clarity after the fact is to be commended. Many other countries are looking on with interest as their BI cases grind slowly through their legal systems.”

Sonia Campbell, partner with Mishcon de Reya, which represents many businesses with BI claim disputes, called the ruling “a real lifeline” for some smaller businesses in an interview with Sky News. “This rips up all previous denials of cover,” she added.

Hiscox, which in August increased its COVID-related loss estimates, said it is assessing the ruling and believes the financial results will be less than expected.

“As a result of the Judgment, the Group estimates additional COVID-19 claims arising from business interruption to be less than £100 million net of reinsurance. This encompasses claims from all divisions including Hiscox Re and is a reduction of £150 million from the upper end of the Group’s previously published risk scenario,” the specialty insurer said in a statement.

Zurich Group praised the ruling for affirming that its policy wordings do not provide cover for pandemic-related BI claims.

Zurich’s CEO Mario Greco said, “While we welcome the judgment of the High Court in respect of Zurich’s wordings, we recognize that COVID-19 has caused immense suffering for our customers, their families and their businesses. We will continue to do all we can to support our customers and our communities at this time.”

AM Best reported that the decision will likely have a “material impact” on UK commercial property insurers’ earnings for 2020, but overall solvency should not be threatened. Some clarity has been achieved, but “questions remain” on the number and severity of now-valid claims, the rating agency said in an analysis. Insurers’ ability to recover from their reinsurers also remains to be seen, Best said.