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Law360, London (April 13, 2021, 3:22 PM BST ) Almost £600 million ($823 million) has been paid out by insurers on claims under business interruption policies following the conclusion of a landmark High Court case, Britain's financial watchdog said on Tuesday.
That figure is made up of a combined £352.1 million in full settlements to policyholders and £247.6 million in interim payments, according to data collected by the Financial Conduct Authority from insurance companies.
The total represents a significant rise on the £470 million in payouts to businesses recorded by the watchdog in March, as insurers increase the rate at which they settle claims.
The FCA has said it will publish claims data from insurers every month, following the conclusion of its landmark legal challenge over whether insurers are liable to pay claims to businesses forced to close during the pandemic lockdowns.
The regulator brought a test case against eight insurers in July to win a ruling on whether policies on business interruption with controversial additional clauses would offer cover against closures brought about by government lockdowns.
The case was appealed directly to the Supreme Court, and Britain's highest court ruled in January that insurers were liable in some cases, particularly when a policy offered cover for closure as a result of an outbreak of infectious disease.
The test case focused on so-called non-damage extensions to business interruption insurance. Policies for interrupted business often offer cover only if a company is forced to close as a result of physical damage to a property. But many insurance policies are sold with add-ons, which provide cover if a business is forced to close because of infectious disease within a specified radius of a company's premises, typically up to 25 miles.
Many insurers refused to pay out on claims after the country was first locked down in March and the coronavirus outbreak took hold, saying that such policies were not intended to cover global pandemics.
The watchdog said on Tuesday that it has noted that some insurers "may have reached different conclusions" over whether a similar policy wording would make them liable to pay out to policyholders.
"This may affect the number of accepted and pending claims that some insurers have reported," the FCA said. "We will work with relevant insurers to ensure consistency in future reporting and will gather and publish this data each month."
According to the statistics, just over 10,200 policyholders had received a payout in March, from a total of 21,140 claimants. And, on Tuesday, it was revealed that both sets of numbers had risen so that 13,670 of a total of 35,438 claimants have received some form of payment from their insurer, or around 38%.
--Editing by Joe Millis.
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