The test case brought by the Financial Conduct Authority (FCA) against eight insurance companies, to clarify whether claims connected to Covid-19 are covered under various Business Interruption Insurance (BII) policies, was highly publicised last week. The High Court ruling in favour of the policyholders is a victory for hundreds of thousands of businesses facing denial from their insurer - but it's not over yet.
At Capital, we’ve been fighting this battle from the start of lockdown. We are currently advising over a hundred businesses across the UK – reviewing their policies for free and where we think there’s a claim, taking the risk upon ourselves to pursue their insurer. If your claim has also been denied, you can send us your policy via this short form.
The result of the FCA test case, confirming the injustice at stake, is raising even more awareness on this issue – but hasn’t solved it. We continue to receive and review new policies in quantity. Because the judgment was not clear-cut on all issues, the specific policy wording of each individual claim will need to be considered against the ruling, to establish whether there is cover.
So, the fight is not over yet. In fact, a new battle has begun – as insurers have yet to confirm they will now pay their claims and how much.
The FCA has called for insurers to handle and assess BII claims promptly and fairly where they have accepted liability. One key issue businesses may face, is where some insurers have been making deductions for some types of Government support received by policyholders during lockdown (such as the small business grants of £10,000; the hospitality business grants of £25,000; and the furlough scheme).
Insurers should not use these assessments as an excuse to delay payment to policyholders. Many businesses are struggling to survive, and the progressive return of lockdown restrictions are not boding well.
Holding off payment, at this stage, would not only be legally contestable, it would also be morally incorrect. It’s a short term non-solution, which will damage an insurer’s reputation in the long term – ultimately causing greater loss.
Insurers need to be smart. Disputes are rarely linear, and reaching the desired outcome isn’t just win or lose. Insurers also need to take into account their overall objectives, consider reputational risks, and establish what relationships matter.
Their clients matter.