Navan firm’s joy at 'David v Goliath' win in insurance case

The owners of an activity centre said it felt like a David and Goliath moment when the High Court upheld an ombudsman's ruling against an insurance company who refused to pay out business disruption cover during Covid-19.

In a ruling Mr Justice Paul Burns dismissed an appeal by insurance provider Hiscox S.A. against the Financial Services and Pensions Ombudsman’s decision to uphold a complaint by NME Zone Limited, trading as The Zone.

Following the pandemic outbreak in early 2020, industry group Play Activity and Leisure Ireland informed The Zone that various government departments, including the Department of Health, recommended the closure of play centres. On foot of this, The Zone closed on March 15th.

The judge noted the centre’s policy included cover for business interruption caused by an inability to use the office due to “restrictions imposed by a public authority” following the “occurrence of a notifiable human disease.”

Hiscox declined The Zone’s claim in March 2020, concluding cover had not been triggered because restrictions or closure would have had to be imposed specifically on the policyholder’s premises and, it said, The Zone had closed without an instruction from the HSE to do so.

Hiscox emphasised that there was “no ambiguity in the policy wording”.

The Zone complained to the ombudsman.

Speaking on the outcome, Finbarr Murray who owns The Zone along with his wife Linda said: "We were ecstatic when he heard it had gone in our favour, we were overwhelmed with emotion that all our efforts were worthwhile. It was a combination of joy and relief after a really tough few years."

"During the pandemic and lockdown, we had no idea how to keep our business going. We were faced with closure or doing whatever we could to survive.

"We were grateful for the financial support the state gave us without which we probably would have closed.

"Every penny we got went towards the loans that we had. We were trying to keep the place afloat until we could open again."

When the husband and wife team reviewed their insurance policy, they were confident that they would be covered but were distraught when the claim was rejected.

"When we reviewed the policy, it said in layman's terms in black and white, that we were covered if we couldn't use our premises due to a notifiable human disease," said Finbarr.

"We were shocked when we were told we weren't covered. It was our friend Dr Dorothea Dowling, an incredible person who gave us her knowledge and expertise and helped us to appeal this to the Financial Services and Pensions Ombudsman (FSPO).

"It would have been absolutely impossible for us to do this without the help of the FSPO."

"Ironically we will be the people to benefit the least from this, there are a lot of companies out there who were covered for business interruption where insurance companies told them they weren't due a payout will now be entitled to it."

It's not the first time Linda Murray has fought for fairness regarding the insurance industry. The businesswoman in 2019 alongside a committee founded PALI (Play Activity and Leisure Ireland) which now has over 100 members in a group insurance scheme including play centres, pet farms, multi-activity centres and playgrounds. She established the group when she couldn't find insurance for her own children's play centre.

"We put our heart and soul into the business," said Finbarr. We have invested all of our life savings. We are just a small family, we are a husband-and-wife team, we have two young children and we stood to lose everything. If Linda hadn't spearheaded the campaign and set up PALI, we would be closed a long with hundreds of companies around the country.

"The leisure industry would be hugely affected. Because of the work that she has spearheaded, there are at least 100 companies that are still opened purely because they got cover under this group scheme

"It would have been easier to close, but we had 20 odd people employed, bringing up families, we are contributing towards the livelihoods of local families, that's an amazing thing to be able to do."