Greggs PLC (LSE:GRG) has won a £150mln legal battle against Zurich Insurance over claims triggered by the Covid pandemic.
The case centred on how much Greggs and other retailers and hospitality firms, such as Slug and Lettuce owner Stonegate, felt they were due in compensation because of pandemic closures.
Greggs argued that Single Business Interruptions Limits were payable every time the government introduced a Covid measure that affected business.
However, the insurers felt that Covid itself was the only disruption, and believed Greggs was only entitled to a single payout of £2.5mln.
Zurich Insurance discharged its obligations to Greggs in January 2021 once that single payout was made.
Yesterday, Mr Justice Butcher rejected this argument, meaning the retailer could be entitled to the entirety of the £150mln it claimed under its insurance policy.
Mr Justice Butcher agreed that there was more than a single occurrence, and hoped the two parties could come to an agreement on the number of disruptions, and therefore the payout.
Manoj Vaghela, a partner at Charles Russell Speechlys, the law firm representing Greggs, stated the ruling had “wider implications for all businesses that purchased the resilience insurance policies”
The extent to which this will impact the hospitality and retail sector at this moment is unknown, according to Mark Brumby, an analyst at Langton Capital.
“There are a lot of unknowns at the moment. The case is for £150mln but the size of the judgement isn’t given.”
“Many insurers may say it’s on a case-by-case basis, but that’s not likely to hold and precedents do count for something,” Brumby added.
Last year, fellow insurer Hiscox paid an additional US$48mln on claims after a Supreme Court Ruling.
The court found that the Financial Conduct Authority’s (FCA) had “substantially” won its case against Hiscox and other insurers on behalf of 370,000 small businesses.
Hiscox would later say it regretted the dispute over the wording of its business interruption policies.