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Law360, London (May 12, 2021, 12:45 PM BST ) Nearly half of the policyholders who have had claims for business interruption during the COVID-19 crisis accepted by their insurers have been paid some form of compensation, with just over £700 million ($990 million) paid out so far, Britain's financial watchdog said on Wednesday.
The Financial Conduct Authority said that just over 17,500 of 36,400 policyholders — 48% — that claimed on their insurance following the conclusion of a High Court case brought by the regulator have received full or partial payouts. This represents a rise from 38% in April, while payouts on claims increased by £101.6 million in the same period.
"We remind firms of the need to handle claims promptly and fairly and to provide reasonable guidance to help a policyholder to make a claim," the City watchdog warned the insurance sector.
The regulator has said it will publish claims data from insurers every month after the conclusion of its landmark legal challenge over whether insurers are liable to pay out on claims to businesses forced to close during the pandemic lockdowns ordered by the government.
The FCA 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 the lockdowns. The case was appealed directly to the Supreme Court in London, which 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 watchdog said on Wednesday that insurers had made full payouts to almost 14,000 policyholders, totaling £433 million, by May 5. Interim or initial payments of £268 million have been made to more than 3,600 policyholders where claims are not yet fully settled.
But as many as 18,900 policyholders have yet to receive any form of payment from their insurer.
The numbers are based only on the claims that have been accepted by insurers, and do not include rejected cases. The number of accepted claims rose from 35,438 in April to 36,414 this month.
The watchdog said on Wednesday 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."
--Editing by Joe Millis.
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