AXIS Specialty Europe SE · DRN-6198504

The complaint A limited company, that I’ll refer to as D, has complained about AXIS Specialty Europe SE’s handling of its business interruption insurance claim. Mr C, a director of D, has brought the complaint on D’s behalf. What happened D operates as a pub. As such, it was impacted by the Covid-19 pandemic. D’s policy in place at the relevant time provided cover for business interruption losses following closure or restrictions placed on the business premises by a public authority as a result of a “notifiable human disease occurring at the Premises”. D submitted a claim to AXIS for the period that it was required to close between March to July 2020, as a result of the Government’s response to the pandemic (the first national lockdown period). This claim was refused and I have issued a separate decision on D’s complaint about that. I will not therefore be addressing this claim any further in this decision. In September 2020 the Government imposed restrictions on pubs. These restrictions lasted from July to 5 November 2020, when pubs were required to close entirely again (the second national lockdown). D made a further claim for the interruption to its business from September 2020. AXIS initially rejected the further claim but in late 2024, Mr C provided evidence he said established that there had been an occurrence of Covid-19 at the premises on 13 September 2020. AXIS did not consider this was enough to establish a claim. In mid-2025 Mr C provided further evidence. This included a copy of text messages from a customer to a staff member on 17 September 2020, which referred to him having had a positive Covid-19 test, a copy of an isolation note and a newspaper article (dated 17 September 2020) stating D was closed for deep cleaning after a customer had tested positive. AXIS accepted that this evidence meant there had been an occurrence of Covid-19 at the premises on 13 September 2020 (or shortly before) and that this therefore triggered cover for the period from 14 September 2020, when D was subject to the ‘rule of 6’, and limited opening hours (from 24 September 2020) to 5 November 2020. AXIS calculated a settlement of £7,008 for this period. AXIS confirmed this was an interim payment and would consider any further evidence D wants to submit about the losses during the relevant period. This included two days of closure in October 2020, when Mr C says he had to close to deep clean the premises after other customers had reported positive Covid- 19 tests. AXIS said that, as the restrictions changed with effect from 5 November 2020, this would be a new event, requiring a new occurrence at the premises, so it does not accept it is liable for any losses after that date.

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Mr C is very unhappy with this. Mr C says that D’s losses should have been covered for 12 months from the occurrence at the premises on 13 September 2020, as the losses were a direct and ongoing consequences of the insured peril (the occurrence at the premises in September 2020) and the associated Government restrictions. In addition, Mr C says that in any case, there were occurrences of Covid-19 at the premises in October 2020, which meant it had to close entirely for two days. This is evidence of occurrences of Covid-19 at the premises that would have been relevant to the Government’s decision to impose the second lockdown from 5 November 2020. Mr C says AXIS has accepted this as evidence by including the losses from the days closed in the settlement already paid, so AXIS should also cover the losses that occurred after 5 November 2020 and for up to the full 12-month indemnity period set out in the policy for this reason. Mr C is also unhappy that the settlement has not been calculated properly, and the time taken by AXIS to make the payment, as he says AXIS had evidence to support that payment earlier than that. AXIS did not change its mind about the indemnity period covered and so Mr C referred the complaint to us. AXIS also said it included the full losses for the days closed in October 2020 on an ex gratia basis but strictly D was only covered for the losses resulting from ‘the rule of six’ and restricted opening hours. It says it has never accepted that there were occurrences at the premises in October 2020. As Mr C remained unhappy, he referred the complaint to this Service. One of our Investigators looked into the matter. Having done so, he did not recommend the complaint be upheld. He agreed with AXIS that when the curfew and rule of six restrictions were lifted and new and different restrictions imposed on 5 November 2020, this was the end of the indemnity period that had been triggered by the September 2020 occurrence of Covid-19 at D’s premises and there was not enough evidence of any other occurrence at D’s premises that would have contributed to the Government’s decision to impose the second lockdown from 5 November 2020. The investigator noted that this was also in line with the legal advice D received and said this was in line with relevant court cases on the issue. The Investigator also said that D only supplied AXIS with detail of the turnover in September and October 2020. AXIS used these accounts to estimate the losses covered by the policy, which was reasonable. D should provide AXIS with further evidence of what its turnover would have been in September and October 2020 had it not been for the pandemic, so it could make a final assessment of the claim value. Mr C does not accept the Investigator’s assessment. Mr C has made a number of points in support of the complaint. I have considered everything he has said and have summarised his main points below: • D’s losses continued beyond 5 November 2020 and on a fair and reasonable basis they should be covered, as they were caused by the same underlying insured event as the earlier losses. • The investigator has relied on outdated legal authority to determine that the indemnity period ended on 5 November 2020. • London International Exhibition Centre plc v Allianz Insurance plc & Ors [2024] EWCA Civ 1026 (“the Excel case”) is the current legal authority. The Court of Appeal made clear findings on concurrent causation and that once triggered, if the interruption continues, indemnity runs for the full policy limit. • Once an at-premises occurrence is established, it operates within the national causal

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matrix. Government measures, including later lockdown phases, cannot be treated as legally independent from insured occurrences forming part of the outbreak. • The Investigator did not consider the Excel case at all and instead deemed Lockdown 2 as a new and legally distinct intervening event requiring separate proof of Covid-19 at the premises. Lockdown 2 formed part of the continuing national response to the pandemic and was not a new legally distinct phase. • D’s legal representatives stated the law as it stood at the time, but the law has changed since the Excel case. • The Investigator’s assessment is also inconsistent with decisions made by this service in other similar cases. • The restrictions D was operating under did not fall away on 5 November 2020 but rather intensified; there was no cessation of interruption and Government measures — including Lockdown 2 — form part of a single indivisible causal matrix arising from the national pandemic. The Supreme Court expressly rejected strict “but for” causation and artificial fragmentation of pandemic response measures. • AXIS paid for the days it was closed in October 2020, which evidences its acceptance of cover for those dates and case law supports that AXIS should not be permitted to recharacterize theses payments nw. Essentially AXIS is estopped from stating that there were not occurrences of Covid-19 at the premises in October 2020. The Investigator told Mr C that he did not think the Excel case superseded other relevant cases also determined by the Court of Appeal, including the case of Various Eateries Trading Ltd v Allianz Insurance Plc [2024] EWCA Civ10. The Investigator said in that case, the court said there would not be “multiple claims” where Covid-19 measures “were renewed, immaterially changed or relaxed” and that our interpretation of this is that where Covid-19 measures become more onerous, such as happened on 5 November 2020, a new potential claim period begins. D’s policy requires Covid-19 to occur at the premises and for that occurrence to be one of the occurrences which lead to the escalated change in measures. The Investigator said the occurrence at the premises in mid-September 2020 can’t be said to have been a proximate cause of the 5 November 2025 restrictions; the restrictions imposed from that date were likely as a result of occurrences of Covid-19 from October 2020 onwards and there was not enough evidence to establish there had bene an occurrence at the premises in October 2020. Mr C does not accept this and so as the Investigator was unable to resolve the complaint, it has been passed to me. What I’ve decided – and why I’ve considered all the available evidence and arguments to decide what’s fair and reasonable in the circumstances of this complaint. D’s policy cover and other relevant considerations I have considered D’s policy carefully. The part of the policy which both parties consider relevant here is the extension to the core cover for closure due to infectious disease. The policy says cover is provided for: “Premises Closure or Restrictions a) closure or restrictions placed on the Premises on the advice of or with the approval of the Medical Officer of Health for the Public Authority as a result of a Notifiable Human Disease occurring at the Premises”.

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The policy defines a “Notifiable Human Disease” as: “An illness sustained by any person caused by a) food or drink poisoning b) any human infectious or contagious disease c) an outbreak of which the competent local authority has stipulated shall be notified to them”. The Financial Ombudsman Service has previously set out in other final decisions how a case of Covid-19 at the premises of an insured can be seen to have caused the national lockdown that followed soon after. This approach has recently been supported by the Courts in London International Exhibition Centre Plc v Royal & Sun Alliance Insurance Plc & Ors [2023] EWHC 1481 (Comm), which is the legal case that Mr C has highlighted as being relevant to D’s claim. In addition to this court judgment, I consider the following cases to also be relevant: Various Eateries Trading Ltd v Allianz Insurance Plc [2024] EWCA Civ 10, Gatwick Investment Limited & Others v Liberty Mutual Insurance Europe SE & Others [2024] EWHC 124 (Comm) (“Gatwick”), and Corbin & King Ltd and others v Axa Insurance UK Plc [2022] EWHC 409 (Comm) (“Corbin & King”); as well as the Financial Conduct Authority v Arch Insurance (UK) Ltd [2021] UKSC 1, on appeal from the decision of the Divisional Court [2020] EWHC 2448 (Comm), which was the initial Covid-19 business interruption test case. That the policy clause above is capable of responding to the type of claim in question here is not in dispute. AXIS has accepted that an occurrence at the premises would be a concurrent proximate cause of the loss incurred, if it counted towards the Government’s decision to impose restrictions or closure on the business. As set out, that is in line with our approach and the case law. D’s claim from September 2020 and the indemnity period AXIS has accepted that an occurrence at the premises on 13 September 2020, or shortly before, was a proximate cause of the restrictions imposed by the Government on 14 September 2020 and 24 September 2020. AXIS agreed to meet the claim for losses as a result of those restrictions. However, AXIS says that the restrictions imposed in September 2020 were materially changed with effect from 5 November 2020 when the Government imposed a second lockdown. AXIS says to be covered for this period, there would need to have been a triggering event of an occurrence of Covid-19 at the premises in the lead up to that decision by the Government. And the occurrence in September 2020 was not a proximate cause of the Government’s decision to impose a second lockdown. Having considered everything carefully I agree. I will explain why. As set out above, the insured peril in this case is the imposition of restrictions or closure on the premises, as a result of an occurrence of a notifiable disease at the premises. Mr C says that in the Excel case, the court rejected the insurer’s arguments that later lockdown phases were legally severable. I do not agree that this is what was said. The Court of Appeal in that case determined that occurrences at the premises could not be separated from other occurrences outside the premises but there is nothing in that judgment, as far as I can see, that would impact the decision here about whether the new and more onerous restrictions imposed on 5 November 2020 would require a new insured event. Mr C says it established that there was one single national response to a single outbreak in

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the UK of Covid-19 and each set of restrictions was part of an evolving response. Again, I do not agree that this means that there is effectively one insured event caused by the September 2020 occurrence at the premises. D’s policy provides for loss as a result of closure or restrictions as result of an occurrence of a notifiable disease at the premises. There were restrictions imposed in September 2020. The restrictions imposed in September 2020 were no longer in place with effect from 5 November 2020. While I acknowledge that D was impacted by the pandemic beyond this date, to meet the terms of the policy this impact has to be as a result of restrictions imposed as a result of an occurrence at the premises. So, I think it is right that the period of indemnity triggered in September 2020 ended on 5 November 2020 when different restrictions were imposed. I agree with the Investigator that the legal case that is of most significance here is the Various Eateries Trading Ltd v Allianz Insurance Plc [2024] EWCA Civ 10 case decided by the Court of Appeal. Nothing in the Excel case means that the Various Eateries judgement is no longer relevant. The Court of Appeal said that there would not be multiple claims where Covid-19 measure were renewed, immaterially changed or relaxed. We interpret that as meaning that if there is a material change, especially a more onerous once (such as happened here) then it would be a new event. The Court said in this case that essentially the Government’s decision to introduce each set of measures was based on there having been numerous occurrences of Covid-19 in the periods leading up to each decision. Each of these occurrences was therefore a concurrent proximate cause of the Government’s decisions. The restrictions on D’s premises in place from September 2020 were changed and new materially different restrictions introduced in November 2020, which was that the premises close. This created a new claim event in November. This can be contrasted with the later restrictions, that continued a requirement for the premises to be closed. I think it’s fair and reasonable to conclude that the Government’s restrictions from November 2020 were made in response to a new threat, i.e. on the basis of new occurrences of Covid- 19. Each of these was therefore a concurrent proximate cause of the Government’s decision. And we have generally considered that each Goverenment decision was based on data of the disease gathered during the preceding two-week period. So, this would mean there’d have to have been an occurrence at the premises during the two weeks or so before the announcement of the 5 November lockdown to be covered. I understand that announcement was made on 31 October 2020. Given this, I do not consider I can reasonably conclude that the occurrence at D’s premises on 13 September 2020 was an equally effective cause of the introduction of the restrictions on 5 November 2020, or any later restriction. By the time of these announcements, it was cases occurring since the decision to impose the September 2020 restrictions that were more effective. I do not therefore consider that R has established a claim for the period beyond 5 November 2020, as a result of the September 2020 occurrence at the premises. D has also said that there were in any case occurrences at the premises in October 2020, so it is covered for losses from then for this reason. I will consider that below. Was there an occurrence of Covid-19 at the premises in October 2020? D was closed for two days in October 2020 (19 and 29 October 2020) it has provided records showing there were no takings for two days, which it says was the result of

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customers reporting they’d tested positive shortly after being at the premises and so it closed for deep cleaning. Mr C effectively says the fact it was closed speaks for itself and that as AXIS has included these losses in the settlement, it accepts this as evidence that there was Covid-19 at the premises. I do not agree. I accept that D was likely told that customers had tested positive having recently been at the premises. But this in itself does not establish that there was any specific occurrence at the premises. As far as I am aware, no evidence has been provided from any customers and no reliable evidence that they would have been diagnosable with Covid-19 at the times they were at the premises. AXIS did pay for the losses for these days but that does not mean it accepted there had been an occurrence at the premises and even if it did, does not bind it to that. I have considered the court cases referred to by Mr C which he says effectively means AXIS is estopped from raising this argument but I do not consider they mean that AXIS is prohibited from concluding there is no occurrence at the premises, such that would trigger a new insured event. AXIS has paid for those two days’ closure, which I think is reasonable, but I do not think that the fact it has done this means it has accepted and is bound by any such acceptance that there was an occurrence at the premises in October 2020. I do not consider this is sufficient to establish there was an occurrence at the premises. It is possible but in the absence of any other evidence I do not consider I can determine that cover was triggered for this Lockdown 2. Other Financial Ombudsman Service decisions Mr C has referred to decisions made by my Ombudsmen colleagues on other cases. I have read all those cases referred to. Each case is determined on its own merits and while we do not have a system of precedent, we do strive to be consistent. Mr C has also said that arguments that Government action constituted a new intervening cause were rejected by the deciding Ombudsmen in those cases but I do not agree that is correct. All the decisions referred to confirm that (for cases with similar policy terms as D has) occurrences at the premises would have been one of the cases taken into account by the Goverenment when imposing restrictions, so would be a proximate concurrent cause. This is in line with what I have set out above and is not in dispute in this case. The decisions also provide that each lockdown would be a distinct event and claims for later periods would have to be based on there having been an occurrence at D’s premises that led to that claim. They rejected arguments that only one indemnity limit would operate. I see nothing in those decisions that is at odds with what the Investigator has said in this case, or my conclusions above. Settlement amount AXIS has made an interim payment for the period September to November 2020 based on turnover figures provided for September and October 2020. In order to accurately work out the losses suffered, it needs to compare those figures to the previous year’s figures for the same period. As far as I am aware, AXIS has not got those figures yet. I think it has acted

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fairly in making an interim payment having done a rough calculation on the evidence it did have. I cannot say what the final figure should be. Mr C has also said that AXIS has not taken account of the loss of functions and events. If D wants this considered further, it needs to provide the evidence required. Time taken to make offer I agree with the Investigator that the claim required “at the premises” evidence of a certain level to be provided to trigger cover under the policy. AXIS asked for evidence of any occurrence at the premises in December 2020. D didn’t supply any information about this until mid-2024 and the original evidence wasn’t considered to be enough. The claim was accepted after D sent the further evidence in 2025 (the news article and evidence from the customer that he had got a positive Covid-19 result). I don’t think that AXIS acted unreasonably in not accepting the claim before this evidence was provided. And once the claim was established with this evince, I cannot see that AXID has caused any avoidable delay. was I have a great deal of sympathy Mr C and recognise the impact the pandemic had on his business. I am sorry to disappoint him, but I do not consider that AXIS has acted unfairly or unreasonably. My final decision I do not uphold this complaint. Under the rules of the Financial Ombudsman Service, I’m required to ask D to accept or reject my decision before 21 April 2026. Harriet McCarthy Ombudsman

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