Pub chain launches £85m action against Marsh

Stonegate Pub Company’s subsidiaries have launched an £85m negligence claim against Marsh, alleging the broker failed to arrange adequate business interruption insurance across the group during the Covid pandemic.

Law firm Stewarts served particulars of the claim on behalf of 20 Stonegate subsidiaries. The action centred on allegations that Marsh had incorrectly named the insured party on the policy, which meant only the parent company was covered rather than the wider group.

According to Stewarts, Marsh had been instructed to arrange insurance for around 750 bars and pubs. However, the claim alleged that 209 of those sites were left without any business interruption cover.

Stonegate suffered around £1bn of losses when its pubs closed during Covid. The group was therefore only able to claim one policy limit for its losses rather than a limit for each subsidiary. Stewarts argued that this shortfall resulted directly from Marsh’s alleged failure to place cover correctly.

‘Professional standards’

Elaina Bailes, partner at Stewarts and a lawyer acting on the case, said the proceedings raised important questions over broker conduct when arranging complex cover for large groups of companies.

Bailes said: “The claim will be of interest to both the insurance and hospitality sectors in examining the professional standards brokers should be held to when placing insurance for groups of companies.

“These circumstances impacted the hospitality sector more heavily than others, with a number of businesses being left with no alternative than to take legal action against their insurers in the wake of the pandemic. It will give rise to questions on how brokers handled the placement of complex BI cover pre-Covid.”

Marsh declined to comment when Insurance Times contacted the broker.

In October 2022, the UK High Court ruled in favour of insurers in a Covid-related business interruption case involving Stonegate Pub Company. Stonegate had filed a lawsuit seeking £846m after being forced to close 760 venues during the pandemic.

The court found that only two events during the policy period could trigger claims and limited the insurers’ liability to £17.5m, with £14.5m already paid.