New data from the Financial Conduct Authority (FCA) shows that 68.4%, or just over two-thirds, of UK policyholders whose COVID-19 business interruption (BI) policies have been accepted by insurers have now recieved at least an interim payment.
As of October 5th, the aggregate value of the payments made for the 24,463 claims where final settlements have been agreed and paid is £766,598,035.
And for interim/initial payments made for the 4,403 unsettled claims where such payments have been made, the aggregate value is now £329,368,933.
Together, this means a total of £1.10 billion in claims has now been paid out by insurers on COVID BI policies, representing an increase of 6.8% on the £1.03 billion that had been paid when the FCA’s September data was released last month.
As we have flagged in previous months, some insurers, such as Hiscox and MS Amlin, have continued to pay out on claims at a far slower rate than the averages have suggested, although even these companies have now managed to make at least interim payments on half of their accepted claims.
As of September 30th, Hiscox had made full payments on 3,363, or 33.8%, of its 9,963 total accepted claims, with interim payments made on a further 1,790, or 18.0%, meaning it has now made payments on 51.8% of its accepted claims, up from 46.5% last month.
MS Amlin, similarly, had made full payments, on 1,600, or 44.0%, of the 3,638 claims approved between its MS Amlin Insurance SE and MS Amlin Underwriting Limited businesses as of September 30th, with interim payments made on another 250, or 6.9%. This means it has now paid out on 50.9% of its total accepted claims, up from 41.3% last month.
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.
Recently, the federal court in Australia decided to rule in the other direction on business interruption issues, siding with insurers on eight out of the nine matters brought forward as part of its national test case.