New data from the Financial Conduct Authority (FCA) shows that to date around £472 million has been paid out for claims related to the COVID-19 business interruption (BI) test case in the UK.
Re/insurers recently submitted their first data concerning progress with BI claims, relating only to claims and complaints on those non-damage BI policies which were affected by the test case.
According to this data, the aggregate value of the interim/initial payments made for the 2,030 unsettled claims where such payments have been made is £192,084,302.
Meanwhile, the aggregate value of the payments made for the 8,177 claims where final settlements have been agreed and paid is £279,823,468.
This means that 10,207 BI policyholders out of the 21,140, who had had claims accepted, had received at least an interim payment.
Notably, the data submitted to the FCA only relates to BI claims where the insurer has received all the information required to enable them to calculate the total value of the claim.
It also includes BI claims for Covid-19 related loss that have been accepted, where the insurer’s decision as to whether there is a valid claim is pending, unsettled claims where an interim/initial payment has been made, and claims where an offer of final settlement has been made, accepted by the policyholder, and paid in full.
In January, the UK Supreme Court decided to uphold the judgement on the FCA’s BI insurance test case, which was first brough forward by the financial regulator in May 2020 to seek legal clarity on whether insurers were obligated to pay out on BI claims related to the COVID-19 pandemic.
After the UK High Court passed its long-awaited judgement on the FCA’s BI insurance test case in September 2020, ruling in favour of policyholders on the majority of key issues, the UK Supreme Court granted permission for the FCA and a group of insurance and reinsurance companies to appeal its ruling.
At the time of the Supreme Court’s ruling, analysts speculated that some 370,000 small businesses may have been affected by the outcome of the case, with a potential £3.7 billion to £7.4 billion of claims on the line.