Unipolsai Assicurazioni SpA v Covea Insurance PLC

Unipolsai Assicurazioni SpA v Covea Insurance PLC

The court held that the term 'catastrophe' in the relevant property catastrophe excess of loss reinsurance contracts is not limited to events causing physical damage, nor does it require suddenness or violence. The COVID-19 pandemic and related closure orders constituted a 'catastrophe' for the purposes of the contracts. The 'Hours Clauses' do not restrict recovery to losses suffered only during the stipulated hours period; rather, an individual loss occurs when the insured is first affected (e.g., closure), and all resulting business interruption losses are recoverable, even if they extend beyond the hours period. The appeals against the findings that there was a catastrophe were...

Parties
Claimant: UNIPOLSAI ASSICURAZIONI SPA (substituted for UNIPOLRE DESIGNATED ACTIVITY COMPANY, IRELAND); Defendant: COVÉA INSURANCE PLC; Claimant: MARKEL INTERNATIONAL INSURANCE COMPANY LIMITED; Defendant: GENERAL REINSURANCE AG
Jurisdiction
England and Wales
Judgment Date
07 April 2024
Procedural Posture
Appeal Under S.69 Arbitration Act 1996 / Judgment on Appeal From Arbitral Awards
Outcome
Appeals by UnipolRe and General Reinsurance dismissed; Markel's appeal allowed on the Hours Clause issue; General Reinsurance's cross-appeal dismissed.
Legal Topics
Reinsurance, Business Interruption Insurance, Aggregation Clauses, Interpretation of Catastrophe Clauses, COVID 19 Related Losses
Insurance Law Arbitration Law Contract Law Reinsurance Business Interruption Insurance Aggregation Clauses Interpretation of Catastrophe Clauses COVID 19 Related Losses

Case Brief

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Parties

UNIPOLSAI ASSICURAZIONI SPA (substituted for UNIPOLRE DESIGNATED ACTIVITY COMPANY, IRELAND)

Claimant

COVÉA INSURANCE PLC

Defendant

MARKEL INTERNATIONAL INSURANCE COMPANY LIMITED

Claimant

GENERAL REINSURANCE AG

Defendant

Procedural Posture

Appeal Under S.69 Arbitration Act 1996 / Judgment on Appeal From Arbitral Awards

Legal Issues

  1. 1 Whether COVID-19 related business interruption losses arose out of and were directly occasioned by one catastrophe under the relevant reinsurance contracts
  2. 2 Proper construction and application of 'Hours Clauses' in property catastrophe excess of loss reinsurance
  3. 3 Whether only losses during the stipulated hours period are recoverable

Ratio Decidendi

The court held that the term 'catastrophe' in the relevant property catastrophe excess of loss reinsurance contracts is not limited to events causing physical damage, nor does it require suddenness or violence. The COVID-19 pandemic and related closure orders constituted a 'catastrophe' for the purposes of the contracts. The 'Hours Clauses' do not restrict recovery to losses suffered only during the stipulated hours period; rather, an individual loss occurs when the insured is first affected (e.g., closure), and all resulting business interruption losses are recoverable, even if they extend beyond the hours period. The appeals against the findings that there was a catastrophe were...

Court Disposition

Appeals by UnipolRe and General Reinsurance dismissed; Markel's appeal allowed on the Hours Clause issue; General Reinsurance's cross-appeal dismissed.

Orders

  • The findings of the arbitral tribunals that the COVID-19 pandemic and related closure orders constituted a catastrophe are upheld.
  • The restrictive interpretation of the Hours Clause in the Markel Award is overturned; losses are recoverable if the insured was first affected during the hours period, regardless of when the business interruption continued.