New data from the Financial Conduct Authority (FCA) shows that to date £600 million has been paid out for claims related to the COVID-19 business interruption (BI) test case in the UK.
This represents an increase of 25.5% from the £478 million in pay-outs that the FCA recorded roughly one month ago.
But at the same time, the total number of pending or accepted claims has increased by more than 20% to nearly 48,000.
And while many insurers have already resolved a significant portion of their claims, some of the largest companies have continued to drag their feet, paying out on only a fraction of their claims so far.
Hiscox, for instance, accounted for almost 90% of the increase in claims over the last month, analysts at Morgan Stanley note, with the company’s claims now standing at almost 12,000 – an increase of more than 150% over last month’s figures.
But despite now accepting around 6,350, or 54%, of these claims, Hiscox has only paid final settlements on 0.2% of its policies and interim payments on a further 1.5%, as of March 31st.
Similarly, MS Amlin, which had not yet paid out on a single claim related to the BI case as of February 22nd, is still lagging far behind its peers in terms of pay-outs, although it no longer has any claims pending approval.
Between its MS Amlin Insurance SE and MS Amlin Underwriting Limited businesses, the company has approved 3,942 claims but only 108, or 2.7%, have been paid out in full, with interim payments made on a further 79, or 2.0%.
In further examples, Canopius has made only 31 full payments and 2 interim payments on its 1,400 approved claims as of March 24th, while HDI has made just 1 full payment on more than 700 approved claims, as of March 19th. Likewise, QIC has proved slow with 3 full payments and 2 interim payments on more than 750 pending or approved claims, as of March 18th.
What’s more, there are concerns about the value of pay-outs after Hiscox Action Group leader Mark Killick told the BBC last month that in some cases Hiscox has agreed to cover claims but set the value of the claim at £0.
According to the FCA’s data, the aggregate value of the interim/initial payments made for the 2,898 unsettled claims where such payments have been made is £247,689,535, up from £192,084,302 last month.
Meanwhile, the aggregate value of the payments made for the 10,772 claims where final settlements have been agreed and paid is £352,101,391, up from £279,823,468 previously.
This means that at the point of data submission, 13,670 BI policyholders out of the 35,438, who had had claims accepted, had received at least an interim payment.
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.