Bunga Bunga owner sues Axa Insurance over business interruption cover
Inception Group, owner of London nightclub Bunga Bunga, is preparing to sue Axa Insurance over unpaid business interruption cover.
Inception Group, which owns restaurants and clubs in central London including Mr Fogg’s and Cahoots, has alleged Axa is trying to “wriggle out” of making a payout, and plans to launch a £3.25m claim in the High Court.
The group had paid £130,000 for comprehensive annual insurance for 11 bars, restaurants and clubs.
The group then filed a claim last March after the UK entered the first coronavirus lockdown, when its revenues were immediately impacted as bars shut their doors and customers stayed home.
The hospitality group claimed Axa wrote to it in April last year noting that “coverage had been triggered” under the policy terms.
However, it said Axa was now trying to row back on the claim, and that Inception Group was not covered for losses under its business interruption policy.
Inception Group said in a statement: “Nearly 12 months after receiving this letter, we still have not received any compensation from Axa for the losses we have incurred due to the government’s forced closure of hospitality.
“To our absolute dismay Axa have now performed a complete u-turn and they are now trying to claim that we are not covered at all.
“This type of behaviour from a big institution and household name such as Axa is morally and ethically reprehensible.”
‘This is no u-turn’
In response Axa denied ever agreeing that the cover had been triggered.
An Axa UK spokesperson said: “The FCA test case has provided clarity around what is and isn’t covered in relation to policy wordings, and it is clear that no cover is provided by the policy wording for this particular claim.
“It is completely untrue that Axa said that coverage had been triggered under Inception Group’s business interruption insurance policy. This is no u-turn. We are continuing to work with clients and their brokers to ensure all valid claims are paid as quickly as possible.”
Last year the High Court ruled in favour of insurance policyholders in a test case brought by the Financial Conduct Authority (FCA) to gain clarity on business interruption claims.
The Court ruled on a representative sample of 17 policy wordings by 16 insurers. It found that most, although not all, of the clauses provided cover.
As a result of the ruling insurers may have to pay out to hundreds of thousands of British firms who had business interruption claims turned down during the pandemic.
Roger Franklin, London Solicitors Litigation Association committee member and head of insurance litigation at law firm Edwin Coe, said: “While the recent Supreme Court decision resolved a number of matters concerning business interruption losses arising from Covid-19, it also created a degree of uncertainty insofar as its treatment of causation issues has encouraged insureds to reconsider clauses which, on the face of it, did not provide cover based upon the reasoning of the judgment at first instance.
“One such clause is that contained within a number of Axa policies. There is now a momentum for insureds with cover provided by Axa to review those coverage issues in light of the Supreme Court decision.
“Many insureds are now contemplating commencing proceedings for a declaration, which is a quick and relatively inexpensive method of resolving such coverage issues. If that goes against Axa, it is likely to have serious financial consequences. A number of large UK restaurant groups which are insured by Axa are already gearing up for battle.”