More than 10,000 UK policyholders affected by January’s Supreme Court Judgement on Covid-related business interruption insurance claims have already received some money, with the total paid out so far topping £470m. The Financial Conduct Authority, which brought the successful test case, released the first batch of data based on submissions from insurers – setting out how claims relating to the case had been accepted and paid by the beginning of March.
The data mark the first stage of resolution to a bruising dispute between some insurance providers and small and medium sized companies over whether business-interruption policies should pay out for pandemic-related losses. Even industry executives concede the episode has done damage to the sector’s reputation.
Thousands of businesses are still waiting for their insurers to come to a decision, despite an order from the regulator that claims should be dealt with quickly. For 8,177 of the claims, wherein final settlements had been agreed and paid, a total of £280m had been paid out, the FCA said.
For 2,030 further claims that have not been settled but where an interim payment has been made, the total paid out by the start of this month was £192m.
The regulator’s preliminary assessment, last June, of the total claims that might flow from the test case was £1.2bn – though it made a clear this was not a firm estimate, and it came prior to the Supreme Court’s judgement.
According to the data, the insurer with the largest number pending business interruption claims is Hiscox, at 4,239. The insurer recently said it regretted the “uncertainty and anguish” that disputing claims had caused. The data indicated Hiscox had made a final or interim payment on just over half of the number of claims it had accepted.
The Hiscox Action Group – which advocates on behalf of policyholders – said the tally was an “appalling indictment of a major insurer, and we are doing everything we can to get both this number increased and to ensure that everyone who is entitled to a payout gets it”.
Hiscox, which has a lot of small business customers, said on Monday that it is “paying claims as quickly as possible in line with the Supreme Court judgement”, adding that the accepted claims and interim payments had increased significantly since it made its FCA submission. MS Amlin had the second-biggest number of pending claims at 3,224; and AXA was in third place at 2,109.
Axa declined an immediate request for comment. MS Amlin did not respond to an immediate request for comment. Covea Insurance topped the list for agreed and paid out settlements, with 2,294 policies resolved. Axis Managing Agency had settled and paid out in respect of 1,547 policies, and Allianz Insurance has done so for 1,459.
In January, following the test-case’s outcome, the FCA wrote a ‘Dear CEO’ letter to insurers: saying it was essential that they “reassess and settle quickly in the light of the Supreme Court judgement, including making interim payments on policies where the claims had been accepted (either in full or in part) but elements of the calculation or agreement on the final settlement remain outstanding”.