Brokerbility’s executive chairman says ‘time is of the essence’ as brokers scramble to ‘calm nerves of both staff and clients’
Brokers have been “inundated” since Friday, when the Supreme Court issued its judgment on the business interruption (BI) insurance test case appeals - however, all brokers “can do is calm [the] nerves of both staff and clients and request patience until the position is clearer”, said Ashwin Mistry, executive chairman of Brokerbility.
On 15 January, the Supreme Court allowed appeals from the FCA and the Hiscox Action Group, while dismissing those made by the six remaining insurers regarding Covid-linked BI claims.
Since the decision was released, Mistry said “our offices have been inundated by clients calling to ask if they too can claim and managing expectations is our greatest challenge here and now”.
Mistry further anticipates that brokers will have a lot to do in the upcoming weeks as a result of the judgment.
He explained: “Brokers are the front line for clients to initiate a claim. We still do not have an affirmative list of circumstances whereby policyholders can claim; the details are in the declarations, which is due shortly.
”All we can do is calm [the] nerves of both staff and clients and request patience until the position is clearer.
“Those with the wider wording (which includes all infectious diseases) will be straight forward as they are, on the face of it, covered - however proving the losses is another task altogether.
“Lots of detail will be required including accounts, business plans, budgets, etc and also there may be ‘inner limits’, which I will assume have been exhausted so the full limits will be payable.
“Broker-worded policies with claims delegated authority will also have to look to their capacity providers and come to a landing pretty soon.
“The work for broker claims teams and client facing staff will be immense and will require empathy, understanding and support from all staff, and management in particular.
“Brokers will have to have an urgent dialogue with the insurers to quickly agree a work pattern. Effective communication with clients will now be paramount.”
Erasing grey areas
Mistry added that “time is of the essence” – a sentiment echoed by Peter Blanc, group chief executive of brokerage Aston Lark.
Welcoming the ruling for “finally bringing clarity”, Blanc added that he was “not surprised with the Supreme Court findings” and hopes that “the affected insurers will move to swiftly [to] settle claims and start the process of helping us all to rebuild the battered reputation of the insurance market”.
He continued: “We all realise that many of the claims that the Supreme Court are now ordering should be paid came about ‘accidentally’ - the market never did intend to be able to provide cover for a global pandemic, but now that the court has ruled, let’s make sure we dispatch our obligations fully and fairly.
“Most importantly, let’s ensure that going forward grey areas and complex wordings become a thing of the past in the insurance profession.”
A spokesperson for Marsh also applauded the clarity provided by the judgment. The firm said: “This decision provides the clarity our clients have wanted.
“Where the court has found that policies respond to the circumstances of Covid-19, we will work with insurers to get claims paid as soon as possible.”
Gallagher shared a similar viewpoint. A spokesperson for the broker said: “We are very pleased that the final judgment in the FCA BI test case has been published and mainly found in the favour of policyholders.
“We have supported our affected clients throughout this court process and will continue to support them to help get their claims get paid as quickly as possible.”
Hope for hospitality
During the course of the legal proceedings, insurer Hiscox faced particular scrutiny – for example from policyholder collective the Hiscox Action Group, which included businesses within the hospitality sector that had not had their BI claims paid.
Simon Mabb, managing director of NDML, has also spoken out against Hiscox.
In September last year, for example, he penned a joint letter to its managing director Ross Dingwall, alongside trade association the Night Time Industries Association (NTIA), to urge the insurance firm “to honour your commitment as a regulated financial organisation and start treating your customers fairly, accept your liabilities, indicate you are not appealing and begin to pay up”.
In light of the Supreme Court’s decision, Mabb said he is “particularly thrilled at this outstanding result for our Hiscox clients, for whom [the] judgment has ruled completely in their favour”.
He continued: “Huge thanks must be given to our customers, for trusting in us to achieve this result for them. As well as Michael Kill and the NTIA, alongside Philip Kolvin QC, who have worked tirelessly with us to make this result happen.
“Thanks to this work, our Hiscox clients will now benefit from a full settlement of their claim, with no deductions or legal fees.
”Unlike many businesses who will see their settlement chipped away, the faith our customers have shown in us means every penny of these essential claims will go to exactly where they’re needed; supporting the survival of the businesses who are the lynchpin of our invaluable leisure and hospitality industry.
“We were confident all along that we were destined for this great result and it’s this faith that allowed NDML and our partners to fight for our clients free of charge, to support the people, businesses and industry we’re so passionate about.”
Michael Kill, chief executive of NTIA, added: “This is a moral victory for thousands of businesses with Hiscox business interruption insurance that have been placed under unnecessary financial hardship because of the legal process that has been drawn out much longer than was necessary by insurers.
“We are extremely pleased that the Supreme Court has dismissed the insurers’ appeal claims and supported the rights of thousands of businesses to be able to claim against their BI Insurance.
“It is now very important that insurers do the right thing and expedite the payment process.”
For Luigi Maggio, managing director of Kennett Insurance Brokers, helping customers demystify insurance jargon in order to manage expectations around payouts will be a vital part of a broker’s job this year.
He explained: “The Supreme Court ruling is positive news for those policyholders with wider disease clauses and will certainly give businesses some respite in these unprecedented times.
”However, as industry experts and representatives, it’s important to ensure the public have a broad understanding of what the actual ruling means.
“We should also remember whilst the news has provided policyholders a sense of justice, it’s only the initial step as they need to demonstrate the loss [caused] by the pandemic, which will be pain-staking and lengthy.
“It’s important for policyholders to understand that the majority of business interruption wordings will not provide cover. As a broking fraternity, we’ll need to deal with policyholders using clear and concise language which isn’t obscure or what they perceive as ‘technical jargon’.
“Undoubtably there will still be many conversations that have a negative ending and leave policyholders feeling disappointed, so it is important to deal with empathy.”