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29 March 2021
The Financial Conduct Authority (FCA) has released the first of planned monthly updates on business interruption (BI) claim outcomes as payments flow following this year’s conclusion of the UK test case, while a legal firm has warned remaining points of law may still trigger further litigation.
The FCA says in its first data collection report released last week that payments totalling £471.9 million ($848.1 million) have been made so far to policyholders who have had claims accepted by insurers affected by the test case outcome.
Information from a first data collection shows that 10,207 policyholders out of the 21,140 that have had claims accepted have received at least an interim payment.
The total value of payments made for 8177 claims where final settlements have been agreed and paid is £279.8 million ($502.9 million), while a further £192.1 million ($345.3 million) has been paid as an interim or initial payment for 2030 unsettled claims.
The regulator has also provided an update on the treatment of government support when assessing business interruption settlements. A number of insurers have agreed not to deduct certain grants from COVID-19 claim payments, it says.
The Association of British Insurers has previously estimated payments of £2 billion ($3.6 billion) are likely for COVID-19 business interruption insurance claims incurred last year.
Legal firm Mishcon de Reya, which represented the Hospitality Industry Group Action and the Hiscox Action Group in the test case, says there are still points of contention that may result in further litigation before all claims are resolved.
These include cases where multiple premises are involved in a business claim, while some insureds may seek to recover damages due to delays in payment. Other issues centre around “at the premises” wording, while real estate policies were carved out from the test case.
“The Supreme Court judgment has been extremely positive for a number of further policyholders who have now had their cover confirmed following an initial denial of their claims by insurers following the lower court’s decision,” the law firm says.
“Unfortunately, however unsurprisingly, this will not bring an end to all COVID-19 related insurance issues, and there are many financially significant points which may still need to be litigated in due course.”