Written evidence submitted by Ponteland Memorial Hall

Submission to DCMS Committee

April 2020

Impact of Covid-19 on the charity sector

Summary

The Insurance Industry’s response to the Covid-19 pandemic has, in general, been that the majority of policies which provide cover for loss owing to notifiable disease, restrict the cover to specific listed diseases which do not include Covid-19.

Our policy, which is one designed for community halls like ours, does not do this but refers to ‘Any occurrence of a Notifiable disease within a radius of 5 miles of the premises.’

Our insurer’s position is however that they interpret this to mean that the loss must be linked directly to a specific, identified occurrence of the disease, which in this case of widespread infection is manifestly impossible.

In any case and regardless of the occurrence of the disease within 5 miles, they consider that the government’s compulsory lockdown is likely to be the proximate cause of any continued interruption to the Business and that this falls outside the scope of cover.

This means, in essence, that we, and others in our position, appear to be covered for loss due to notifiable disease unless the disease is widespread and the government directs us to close because of the disease.

We have reported that matter to our MP, Guy Opperman, and received a helpful response.

We hope that the Committee will seek to influence the insurance industry in general by persuading them to accept responsibility for assisting their clients by interpreting policies in the spirit and with the meaning which their clients could reasonably have expected.

Village halls/community buildings like ours are a vital resource at the heart of many communities, acting as a hub for multiple local services and hosting community enterprises. There are about 10,000 village halls in England and they play a fundamental role in community life, frequently providing the only venue where services are delivered and community activities take place. The loss of vital services -- including schools, shops, pubs and post offices - has made community buildings even more critical to community sustainability. Their primary source of funds is from hiring their facilities and it is vital that they are sustained through the emergency so that they can continue their essential work into the future.

David Goodchild

Treasurer

Ponteland Memorial Hall

Introduction

Ponteland Memorial Hall is a community hall in Northumberland, proving facilities for Social, Educational and physical activities and a wide range of private functions including weddings. Its governing body is a registered charity and it has one full time and three part time employees. It is funded by income from room hire and grants including one from the local town council.

Use of its facilities has been growing substantially in recent years but it still operates with a small deficit which was expected to be converted into surplus in 2020-2021.

Insurance for loss due to Covid-19

The hall and its contents are insured via Norris and Fisher Ltd, an Insurance Broker who specialise in obtaining cover for community halls. They provide a policy via Covea insurance plc.

This policy includes cover for:

‘loss resulting from interruption of or interference with the Business carried on by you at the premises in consequence of:

3. Any occurrence of a Notifiable disease within a radius of 5 miles of the premises.

In response to publicity about the rise in occurrence of Covid-19 in the UK, our hirers began cancelling their bookings from March 15th and by the time the government directed all community halls to be closed the majority of them had done so. The few remaining bookings gave notice when the government directed all meeting places like ours to be closed.

On the basis of our understanding of our insurance policy wording we submitted a notification of claim to our broker on 23rd March 2020 (Annex 1).

The extract below from Covea Insurance (full text in Annex 7) sets out their position:

There are further extensions to cover provided under the business interruption section, one of which

is in relation to Notifiable Disease. This section provides cover in relation to interruption to the

Business or interference with the Business due to:

any occurrence of a Notifiable Disease at the Premises or attributable to food or drink

supplied from the Premises;

any discovery of an organism at the Premises likely to result in the occurrence of a Notifiable

Disease;

any occurrence of a Notifiable Disease within a radius of 5 miles of the Premises;

In order for cover to respond under this extension, it would be necessary for you to demonstrate that

any loss of Gross Income was directly due to an occurrence of COVID-19 at the Premises or in

direct relation to an occurrence of COVID-19 within a 5 mile radius of the Premises.

Irrespective of whether there has been any occurrence of COVID-19 within the vicinity of the

Premises, it would be necessary for you to demonstrate that this specific incident is the direct reason

for any reduction in business. It is our position that any outbreak of COVID-19 in the vicinity of the

Premises is unlikely to have been directly responsible for any reduction in Gross Income; rather the

reduction in Income has occurred because of the general public’s concerns and approach to

self-isolation prior to any government compulsory lockdown.

Furthermore, irrespective of any potential cover under the Disease extension, the government has

implemented a compulsory lockdown period resulting in the general public being confined to their

homes. We consider that it is this compulsory lockdown which is likely to be the proximate cause of

any continued interruption to the Business. This falls outside the scope of cover and we do not

consider the policy will be able to respond on this occasion.

Should you consider that you are able to demonstrate that the sole reason for interruption to your

Business is an outbreak of the disease at or within 5 miles of the Premises such as to fall for

consideration under the Disease extension, it will be necessary for you to provide evidence of a

specific occurrence of COVID-19 and explain how that has directly impacted your trading together

with evidence of your daily revenue and expenses for the last 6 months, as well as both your audited

accounts and management accounts for the last financial year and up to the present day. Details of

any financial support received or applied for through the Government COVID-19 small business

assistance response should also be provided.

There is no reference in our Policy Wording to a requirement that our loss must be as a consequence of a specific, identified occurrence of a notifiable disease nor to any that closure of the premises by direction of the government because of the disease invalidates our claim.

We therefore consider the rejection of our claim to be unreasonable and unjustifiable. We have formally made a complaint to the company (Annex 9) and, failing a satisfactory response, will refer the matter to the Insurance Ombudsman.

However we believe that the attitude of this company, if typical of the response to Covid-19 of the insurance industry in general, is of great concern when the government is making huge and unprecedented commitments to the support of all those affected by the disease. It is obligatory on the Insurance Industry to play its part and not to stand on narrow and partial interpretation of polices, especially where those polices make specific reference to cover for loss of income arising from the disease.

Annex 1

23rd March 2020

To: Covea Insurance Commercial Care Line

Ponteland Memorial Hall - Policy Number CARV15004602

This is to inform you that we intend to submit a claim for loss of income arising from the Covid-19 virus pandemic.

The UK government continues to issue very strong advice to the public to avoid personal contact and not to meet in groups. This especially applies to elderly and other vulnerable people which includes many of our hirers. Schools and nurseries have been instructed to close and several of our hirers provide educational and other services to children. Our premises are frequently hired for wedding receptions and other celebrations involving a few hundred people and all of those have cancelled because of concern about the very high and serious risk of infection. Together the vast majority of our hirers are affected. Confirmed cases of the virus continue to grow at an increasing rate.

Most of our hirers have already cancelled all of their bookings for the foreseeable future solely because of government advice and concern about safety. We are attempting to continue to provide a minimum service to the very small number of hirers who deal with clients on a one to one basis and who, together with our employees, are able to ensure cleanliness and safety.

We are aware of cases of the virus in the vicinity but no doubt you can confirm that with Public Health England. The wording in our policy documents appears to us to be very clear and unambiguous and, as far as I’m aware, there’s nothing in our policy documents about a requirement for the hall to be instructed to close as a condition of our eligibility to claim. Our losses very clearly arise solely from the situation caused by Covid-19 and from the government’s response to it.

We are assembling information on the extent of our losses which are likely to continue for several months. Apart from our regular bookings we would have expected a stream of one off hirings including weddings which form a significant proportion of our income.

I look forward to hearing from you.

David Goodchild

Treasurer, Ponteland Memorial Hall

Annex 2

Response from the Insurance Broker

From: Martyn Ingram
Sent: 13 March 2020 15:22
To:
Subject: RE: Ponteland Memorial Hall Insurance Renewal

Hello Mr Goodchild,

Tom has passed your enquiry to me and I have been discussing the COVID-19 matter with your insurers. They have confirmed that cover does apply for loss of income arising from COVID-19 but only in the event that the Hall is forced to close by the local authority. Cover does not apply unless this is the case so if a hirer cancels owing to concern about the virus the consequent loss of income would not be insured.

Most insurance policies include a list of diseases for which cover would be applicable. As you have noticed, the Covea policy does not do that – it simply requires that the disease be notifiable. Thus it is providing wider cover than the market norm but it would still appear that a loss of income claim is unlikely to succeed.

If you have any further queries then please do not hesitate to contact me.

Regards,

Martyn Ingram FCII
Norris & Fisher (Insurance Brokers) Ltd

Annex 3

To the Insurance broker

From:
Sent: 13 March 2020 10:16
To: Tom Ingram
Subject: RE: Ponteland Memorial Hall Insurance Renewal

Hello

Here’s the link to the government website where it says Covid-19 is a notifiable disease.

https://www.gov.uk/government/news/coronavirus-covid-19-listed-as-a-notifiable-disease

Annex 4

From: Martyn Ingram
Sent: 30 March 2020 08:56
To:
Subject: RE: Ponteland Memorial Hall Insurance Renewal

Hello again David,

Thank you for your email. Insurers are gradually providing more information with regard to the potential of claims for loss of income but I remain of the opinion that you will not be able to make a successful claim. I hope I am wrong for both of us! The closure of premises may need to be dependent upon the disease occurring at the insured premises to provoke the closure, rather than it being a nationwide government closure. I am anxious that you should not have the expectation of a successful claim only to be disappointed later. Nevertheless, I do believe you should pursue this claim in the current circumstances.

Unfortunately the only contact address and telephone number I hold for Covea is the same as the one you have so I am not able to bring any pressure to bear. As I am sure you will appreciate, their claims department is inundated with enquiries and it may be some time before you receive a response.

If I receive any definitive news on the potential for this claim I shall let you know.

Regards,

Martyn Ingram

Norris & Fisher

Annex 5

To the Insurance Broker

30th March 2020

Hello Martyn

I hope you’re wrong too.

If that is the attitude taken by the insurer we will object in the strongest ways available to us.

As you have accepted and as is abundantly clear, our policy is explicit and unambiguous about our cover for loss of income owing to notifiable disease. In Section 2 - -‘Business Interruption’ of the Policy Wording under Notifiable Diseases, Vermin and Murder or Suicide it says:

Section 2 includes loss resulting from interruption of or interference with the Business carried on by you at the Premises in consequence of

3. Any occurrence of a Notifiable Disease within 5 miles of the Premises.

As I said there is an occurrence within less than 1 mile.

Any attempt by the insurers to alter these statements retrospectively or to deny liability can only damage the reputation of the Company and the insurance industry as a whole.

Please do all you can to ensure that the company is fully aware of its responsibilities in this claim. We have already made our MP aware of the matter and this email is copied to him.

David

Annex 6

To the Insurance Broker

From:
Sent: 29 March 2020 12:17
To: Martyn Ingram
Cc: 'Robin Ramsay'
Subject: RE: Ponteland Memorial Hall Insurance Renewal

Hello Martyn

Can you advise please?

As you’ve said our policy is clear on the breadth of cover for loss arising from notifiable diseases and there is now no doubt at all on the requirement to close the hall because of government instructions and we have done so. Also there is now a confirmed case of the virus in a doctor in our local practice.

We urgently need a response from the insurers so that we may decide what action to take to preserve our financial situation.

Is there anything you can do to expedite things?

Thanks

David

David Goodchild

Annex 7

From Covea insurance

Ponteland Memorial Hall Tel: 0118 9258724

Ponteland Memorial Hall, Darras Road

Ponteland

Newcastle Upon Tyne

NE20 9NX

03 April 2020

Dear Sirs

Re : Claim Ref : C020110205

Incident Date : 23/03/2020

Thank you for your recent enquiry regarding a potential Business Interruption claim in relation to the

Coronavirus (COVID-19).

At this stage we are unable to confirm that there will be any cover under the policy or that liability for

any claim is accepted. All our rights are reserved in full and any requests for further information are

made on an entirely without prejudice basis and should not be considered an affirmation of cover.

In general terms, for business interruption cover to respond there has to be interruption to or

interference with the Business as a consequence of Damage occurring at the Premises. The

presence of COVID-19 is not considered Damage. Irrespective of this, if the presence of COVID-19

was considered to constitute damage, it would be excluded under the General Exception that

features in most policies regarding Pollution and Contamination and specifically in this policy as

General Exclusion Page 17. The same also applies in relation to any Denial of Access extension

cover.