Business Insurance payouts for firms forced to shut their doors during the coronavirus pandemic are set to top the £1bn mark.
And with more settlements for business interruption insurance to come, it looks like the billion-pound threshold is about to be passed, well ahead of the end of the calendar year.
The figures for 2021, up to August 5, reveal a total of £946m has been paid out by insurance firms in the wake of the national lockdowns.
Data released by the Financial Conduct Authority (FCA) shows that insurance companies have forked out a total of £636.7m in full settlements to policy holders since January. A further £308.8m was distributed in interim or initial payments.
And with more than a third of businesses who have had their claims accepted but are yet to receive their compensation those figures are set to go even higher.
Countless businesses were left in financial peril during the COVID pandemic, unable to trade normally and with many insurers refusing to honour their policies.
However, a test case brought against eight insurers last year by the financial regulator set a precedent with a ruling on whether business interruption insurance policies should honour their obligations in cases of closures brought about by the government-imposed lockdowns.
And businesses won.
In September 2020, the High Court ruled in favour of the business sector, deciding that insurers failed in their duty and ordering them to honour these policies even if they had refused to before that point.
The case was appealed in the Supreme Court in London which ruled that insurers are, in most cases, liable when a policy offered cover for closure as a result of an infectious disease outbreak.
According to the FCA, more than 26,200 of nearly 42,000 policyholders that have had claims accepted have received at least an interim payment from their insurer. The other policy holders, around 38% of them, are still waiting to see any money from their insurers seven months on from the judgement.
“We remind firms of the need to handle claims promptly and fairly and to provide reasonable guidance to help a policyholder to make a claim,” read a statement from the FCA.
That January appeal ruling is viewed as a major positive for UK business owners, with close to 400,000 businesses affected and anywhere between £3.7bn and £7bn in claims on the line.
The judgment is legally binding on the eight insurers that agreed to be parties to the test case, which examined the wording in a representative sample of 21 policy types. The insurers in question are:
- Arch Insurance (UK) Ltd
- Argenta Syndicate Management Ltd
- Ecclesiastical Insurance Office PLC
- MS Amlin Underwriting Ltd
- Hiscox Insurance Company Ltd
- QBE UK Ltd
- Royal & Sun Alliance Insurance PLC
- Zurich Insurance PLC.
The ruling showed that the insurers failed in their duty – and while it doesn’t determine how much is payable under individual policies it provides the basis for payment to be made.
You could be entitled to thousands of pounds in compensation as a result of the Supreme Court decision.
If your business was forced to close due to coronavirus, you could make a Business Interruption claim to recoup your losses. Barings Law’s team of legal experts can work with you on a no-win no-fee basis, preparing a claim to maximise your claim for:
- Actual and/or loss of revenue
- Business costs such as rent , even when you were unable to trade
- Loan charges accrued during the COVID lockdown.
Getting the process under way is a fast, simple process. And if you have further queries call us on 0161 200 9960 for a free, no obligation consultation with one of our advisers.
We’re ready to help your business claim what you deserve.