A group of policyholders have written to the Financial Conduct Authority (FCA) to report that some insurers are still refusing to pay out on business interruption (BI) claims, even after the UK High Court’s ruling last week.
The court sided with policyholders in a landmark judgement that obligated UK re/insurers to honour BI claims connected to the COVID-19 pandemic.
But the Hiscox Action Group (HAG), which consists of more than 400 Hiscox policyholders, says that many claimants are still waiting for interim payments to begin, which is pushing some of them close to collapse.
In a letter to the FCA’s Interim Chief Executive, they have called on the UK regulator to take action against Hiscox and other insurers that they say are deliberately delaying payments.
“Hiscox Action Group members are small businesses, many of whom are struggling to survive. They desperately need these payments to stay afloat,” said Richard Leedham, the Mishcon de Reya partner representing HAG.
Christopher Woolard, the interim chair of the FCA, stated prior to the ruling that “insurers should reflect on the clarity the judgement provides and, irrespective of any possible appeals, consider the steps they can now take to progress claims of the type that the judgement says should be paid.”
UK insurers were the subject of much bad press over their refusal to pay out on what policyholders saw as legitimate BI claims back at the outbreak of the pandemic.
Following the verdict on the FCA’s legal case, Christopher Croft, CEO the London & International Insurance Brokers’ Association (LIIBA), said that “the industry’s reputation has been damaged by the debate over exactly what is or is not insured.”
He added that “the fact that this case had to take place at all is a rebuke to our industry and the often obscure language we use.”
But industry optics are now likely to get even worse if it’s confirmed that insurers have been withholding payments even after the legal ruling, particularly if the regulator has to involve itself.
The FCA has the enforcement powers to ensure insurers make payments on claims and honour the court’s ruling.
In his letter to the the FCA, Leedham said: “We would ask you now to use your considerable enforcement powers to compel Hiscox to make these interim payments instead of standing by and seeing even more of these businesses go to the wall.”
It was reported last week that Mishcon de Reya, which represents HAG, is considering legal action twelve more insurers following the BI court ruling.