Sixteen insurers are facing a High Court battle with the City watchdog after being accused of wriggling out of paying claims to firms hit by the lockdown.
Thousands of companies were stunned when their insurers claimed the business interruption policies they had bought did not cover losses incurred when they were ordered to close.
Most business interruption policies only cover more common hazards such as fire and flooding, which can put a firm out of action.
High Court fight: The Financial Conduct Authority watchdog has accused sixteen insurers of wriggling out of paying claims to firms hit by the lockdown
But some specifically promise to cover disruption caused by infectious diseases or pandemics.
As anger rose among small companies, the Financial Conduct Authority (FCA) intervened, saying it would take the insurers to court in late July to have a judge decide whether they should be forced to pay out.
Yesterday the FCA revealed several insurers which had refused to pay claims have since backed down and agreed to stump up. But it declined to reveal how many firms have backed down and who they are.
It added that the policy wordings used by eight insurers will be used in the court case.
Those under scrutiny include Hiscox, Royal & Sun Alliance, Zurich, MS Amlin, QBE, Arch Insurance, Argenta Syndicate Management and Ecclesiastical Insurance Office.
Only certain policy wordings, which are the most ambiguous, will be included in the court case.
Another eight, including the Allianz and Axa, have also been identified by the FCA as including similar policy wordings.
This means that if the court orders the first eight insurers to pay out to their customers, the other eight will also have to back down and hand out the cash. But the FCA added that the entire list of 16 insurers would not be the only ones affected.
If the judge finds that insurers should pay out for loss of business following the pandemic, the entire industry will have to examine their policies and make sure they are complying with the ruling.
The FCA said that it would publish a more comprehensive list of other insurers whose business interruption policies could be affected in July.
Christopher Woolard, interim chief executive of the FCA, said: ‘The court action we are taking is aimed at providing clarity and certainty for everyone involved in these business interruption disputes, policyholder and insurer alike.’
Tulsi Naidu, the UK chief executive of Zurich, said it had so far received ‘limited claims’ from customers which held the types of policy the FCA is investigating. The entire industry will benefit from the legal analysis of a small number of test cases.’
Insurance market Lloyd’s of London said that across all policies the industry could end up paying out up to £3.5billion.
https://news.google.com/__i/rss/rd/articles/CBMicGh0dHBzOi8vd3d3LnRoaXNpc21vbmV5LmNvLnVrL21vbmV5L25ld3MvYXJ0aWNsZS04Mzc3NDMzL1NpeHRlZW4taW5zdXJlcnMtZmFjZS1jb3VydC1iYXR0bGUtbG9ja2Rvd24tY2xhaW1zLmh0bWzSAXRodHRwczovL3d3dy50aGlzaXNtb25leS5jby51ay9tb25leS9uZXdzL2FydGljbGUtODM3NzQzMy9hbXAvU2l4dGVlbi1pbnN1cmVycy1mYWNlLWNvdXJ0LWJhdHRsZS1sb2NrZG93bi1jbGFpbXMuaHRtbA?oc=5
2020-06-01 22:25:50Z
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