London International Exhibition Centre Plc v Royal & Sun Alliance Insurance Plc & Ors

Business interruption cover for disease occurring at insured premises is not subject to a different causation test from disease cover defined by a geographical radius. Where multiple cases of an infectious disease combine to cause public-health restrictions, each insured occurrence may be a proximate concurrent cause, even though the restrictions would have occurred without it. Neither but for causation nor a requirement for a distinct or specifically targeted occurrence is necessary.

The disease must, however, have been notifiable when the relevant occurrence took place. Policy wording referring to a Medical Officer of Health of or for a Public Authority may include senior national medical advisers where the surrounding wording supports that construction.

Six expedited test actions concerned business interruption losses arising from Covid-19 and disease extensions in commercial insurance policies. The policies variously covered disease occurring at the premises, disease within a radius, closure or restrictions imposed by public authorities, or disease suffered by visitors or employees.

The principal question was whether the Supreme Court’s causation analysis in the FCA test case applied to disease cover confined to occurrences at the premises. Further issues concerned occurrences before Covid-19 became notifiable, the meaning of Medical Officer of Health of or for the Public Authority, and the Mayfair wording referring to disease suffered by a visitor or employee.

1. Concurrent causation. The Supreme Court’s reasoning in [2021] UKSC 1 applied to disease clauses covering occurrences at the premises. The geographical limitation defined the insured peril; it did not determine the causation test. A covered occurrence at the premises could therefore be a concurrent proximate cause of restrictions imposed in response to Covid-19 cases more widely.
2. The insurers’ proposed but for test and their alternative requirement for direct, distinct, palpable or discernible causation were rejected. Those approaches improperly set uninsured cases against insured cases and created uncertain and artificial distinctions. It was sufficient to prove that the relevant restrictions were imposed in response to cases which included at least one covered occurrence at the premises. Diagnosis, reporting or prior governmental knowledge of that occurrence was unnecessary.
3. An occurrence of Covid-19 before it became a notifiable disease did not satisfy wording requiring an occurrence of a Notifiable Disease. Notifiability described the character of the disease at the time of occurrence. Covid-19 therefore became relevant only after it was added to the applicable statutory list.
4. In the Kaizen and Why Not Bar policies, “Public Authority” had its ordinary broad meaning and was not confined to local authorities. “Medical Officer of Health” could include the Chief or Deputy Chief Medical Officer advising the national government or a devolved government. The relevant government restrictions were capable of satisfying the policy wording.
5. In the Mayfair policy, “suffered by any visitor or employee” was construed as equivalent to having contracted or sustained Covid-19 while at the premises. It did not require subjective experience of symptoms. Alternatively, the wording would include disease manifested by symptoms or diagnosis at the premises.
6. The preliminary issues were answered accordingly. In particular, the court answered “Yes” to the policyholders’ concurrent-causation formulations and “No” to requirements of necessity, specific targeting, diagnosis or reporting, subject to the separate requirement that the disease was notifiable when it occurred.