According to the Association of British Insurers (ABI), insurers in the UK are set to pay out £1.2 billion in claims from individuals and businesses affected by Covid-19 over the coming months.

Of this estimate, the ABI says that around £900 million will cover business interruption claims, £275 million for cancelled travel arrangements, and £25 million for cancelled school trips, weddings and events. Whilst these figures are just estimates, they do make up an official submission to the Treasury Select Committee in order to provide as accurate a picture of the state of the insurance industry as possible at this stage.

The ABI also said, in this blog, that insurers have been managing an extraordinary level of activity over recent weeks, thanks to Covid-19, with some insurers saying that they are dealing with a 200% increase in call volumes.

Huw Evans, director general of the ABI, said:

“This is an unprecedented event, and insurers recognise that it is a very worrying time for everyone.

“While many business owners are uninsured for pandemics, UK insurers still expect to pay over £1.2 billion in claims, making this a significant insured event.

“From paying all valid claims, to providing a range of extra help and support to customers, insurers are working hard to reassure and support policyholders through this uncertain period.

“However, we are also painfully aware that the majority of businesses are uninsured for global pandemics, as is the case throughout continental Europe and North America.

“Although ABI members expect to pay £900 million in business interruption claims, most policyholders are not covered for pandemic losses. We agree strongly that the UK should examine public-private partnerships to find a lasting solution, to enable more affordable, more extensive pandemic insurance cover to be available to those firms who want it.”

Pressure Groups Approach ABI

In response to the ABI, protest group ‘Covid Claims Group’ has written an open letter to the ABI regarding its stance on Business Interruption claims, calling it ‘callous and wrong’. In the letter, founder of the Covid Claims Group, James Ollenshaw, asked insurers to rethink their stance and promise to honour extended business interruption claims with regards to the coronavirus.

Mr. Ollerenshaw wrote:

“The ABI’s abrogation of responsibility has come as a considerable shock to SMEs that paid extra for extended business interruption (BI) cover.”

The letter goes on to say that whilst they did not expect businesses with basic business interruption insurances to be covered for the Covid-19 situation, they are aghast that pay-outs are been refused where policy holders have paid a premium for a level of cover that they believed would protect them against any forced closure of their business.

Insurers including Hiscox, RSA, QBE and Allianz have all come under fire for their refusal to pay out on business interruption claims, seemingly backed up by the ABI’s public position on such claims.

As of Monday 11 May the letter had 666 signatories.

Why Are Businesses Struggling to Claim?

Each insurance policy is different and, even if policies do have the extensions outlined above, there may be certain exclusions which insurers may seek to rely upon; or insurers may argue that the novel COVID 19 pandemic is simply not covered.

Another point to note is that business interruption policies often require the outbreak to be specifically at the business premises or within a certain area surrounding the premises. Certain insurers are relying on this to avoid cover.

How Can You Make A Claim?

If you wish to make a claim on your insurance for anything related to coronavirus, it is useful for you to follow certain steps to make it more likely that your claim will be successful.

  1. Look over your insurance policy in fine detail to see if your situation is covered.
  2. If you do believe that you are eligible to make a claim, build your case carefully, gathering any documents and evidence that you can to make your case stronger. These could include documents that prove your earnings, and any documentation that evidence the damage done to your business.
  3. Follow the claims procedure specified in your policy documents. Failure to follow the procedure may jeopardise your claim.

What If Your Insurer Declines Your Claim?

  1. You could make a formal claim against your insurer which may involve instructing solicitors and ultimately commencing court proceedings.
  2. You could also investigate whether you have a claim against your broker for failing to advise you properly.
  3. Financial Ombudsman Scheme. You could make a claim under this scheme, which is limited to £350,000 per claim. This could be a quicker and cheaper alternative to suing your insurer or broker in court.

If you are uncertain about the legalities, or have been turned down by your insurer but think they are wrong, then seeking legal advice would usually be your next step.

Vyman Solicitors have a large and successful commercial law section and are fully able to help you interpret the finer points of your insurance policy, and are here to advise you on what we think your chances of success are.

You can reach us on 0208 427 9080 for further information.