In Focus: Is the Covid linked business interruption claims backlog still an issue for UKGI?

Joanna Grant, managing partner, Fenchurch Law

Statistics published by market intelligence firm Solomonic this year (2025) tell an interesting story about the state of play regarding Covid-19 associated business interruption (BI) litigation that began with the FCA test case back in 2020.

Since January 2021, the report noted that 136 Covid linked BI claims with a total claim value in excess of £1.8bn have been filed. Of these, over 100 claims are still ongoing, with a claim value in excess of £500m.

However, this wave is now something of a trickle, with the number of new BI claims linked to the pandemic dropping from nearly 100 in 2023 to just four in 2024 and two in 2025.

This is not necessarily the end of the story. With limitation approaching – the end of the time limit within which legal action, such as a lawsuit, must be initiated – this time next year, we may see an uptick in claims.

We are encouraging brokers and policyholders to take steps now to bring any unresolved claims in advance of the March 2026 deadline.

We are aware of a number of unresolved claims still out there due to policyholders holding back their own claims pending the outcome of ongoing litigation. We are therefore continuing to receive enquiries about the extent of cover available, particularly following recent Court of Appeal judgments in ’at the premises’ and ’non-damage denial of access’ test cases, published in 2023 and 2024 respectively.

Despite those judgments, uncertainties remain around the evidential threshold for proving a case of Covid-19 at the insured premises and around what constitutes an ‘occurrence’ for the purposes of certain denial of access wordings. 

What has become clear following the Supreme Court’s test case ruling in 2021 is that the UK’s courts are taking an increasingly strict approach to policy wording interpretations – regardless of whether that leads to an unexpected or uncommercial outcome.

Insurers, brokers and policyholders alike need to pay attention to their wordings – particularly around limits, aggregation and non-damage endorsements, to ensure that policies will respond as intended when a claim arises.

Andy Holmes, group capacity director, CFC Underwriting

The biggest learning for the UK general insurance industry, in my opinion, was that we have to ensure that we are providing certainty and clarity to our customers.

All the various legal actions and test cases associated with Covid-19 linked BI claims boiled down to the same thing – customers thought they had cover for an event which, according to their insurers, they did not.

The core problem was a lack of clarity. Policies failed to address the impact of a major event, like the Covid-19 pandemic, in crystal clear fashion. Detailed language in policies meant more complicated language. Insurers and their lawyers knew what they meant – but their customers didn’t.

It behoves every insurer – no matter what class of business they are writing – to pinpoint exactly where cover starts and stops.

Equally important, they should review all the exclusions written into policies and consider building those that are truly relevant into the scope of the cover, as defined by the insuring clause.

As a percentage of gross domestic product (GDP), customers are spending less on insurance today than they were 20 years ago – in part due to the massive loss of trust the industry suffered following the pandemic.

If we are to rebuild that trust, we must provide consumers with policies that are clear, relevant and that deliver the certainty they deserve.

Kate Pert, senior complex claims and disputes consultant, Marsh

The insurance industry has faced an unprecedented challenge in the last five years, as nearly every UK business was affected by the Covid-19 pandemic.

Insurance clauses related to the losses experienced during this time were often drafted as small policy additions to address minor incidents, including those drafted with a view to food poisoning outbreaks, bomb scares or local authority interventions.

Identifying which clauses could respond to Covid-19 linked situations and to what extent was a huge task.

Although the Supreme Court offered a strong framework in its ruling, distinguishing how any given business was impacted and how certain clauses would respond to pandemic linked claims was challenging – as demonstrated by the volume of ongoing litigation. The industry rose to this challenge and the vast majority of claims have been resolved.

However, as the limitation for lots of clients approaches, many claims remain outstanding.

Some claims only arose from later judgments – for example, following confirmation that ’disease at the premises’ clauses could cover national lockdowns – while some relate to more complex businesses, where more impact analysis is needed.

Many BI claims are also the result of insurers’ delay.

Clients must wait for claims to be reviewed by insurers’ lawyers and accountants, deal with further queries and hope it is all resolved by early 2026. Alternatively, protective proceedings on all unsettled claims could be issued – an expense for policyholders and insurers.

Since insurers are generally not being swayed by first instance decisions, court backlogs on the ongoing litigation are not a major factor in resolving claims.

Judgments which have been issued give sufficient clarity for insurers to provide clear guidance as to how they will respond to each clause and what evidence they require from policyholders to justify claims.

Brokers cannot manage clients’ expectations or provide definitive guidance on the merits of claims when insurers adopt very different approaches between clients.

Angus Osborne-White, director of forensic accountancy services and head of technical development, Crawford and Company

Although we were entrusted as an industry to manage thousands of Covid-19 linked BI claims, there remains a very small number where there continues to be differences of opinion on aspects of policy coverage.

As recently as February 2025, we have had legal decisions made that have the potential to have a significant impact on the way that Covid-19 associated claims are calculated.

For example, Bath Racecourse and Others v Liberty Mutual, Allianz Insurance and Aviva Insurance, provided the first judgment that specifically related to furlough.

Had the court made a different decision, then the onus would have been on the insurance industry to re-open the majority of Covid linked claims in order to calculate additional payments. Very few claims would not have been impacted by this.

There still remains a limited possibility for this decision to go to the Supreme Court.

It is important to consider that the number of cases that we see in court is very small compared to the number of claims that are impacted by each case that is decided.

Each decision made allows another block of claims with similar circumstances to move through to settlement – the challenging aspect is ensuring a thorough review of outstanding claims against new judgments each time they are made, so that no claim is left behind in the process.

The Supreme Court’s test case ruling allowed the first and most significant block of claims to be dealt with. However, as might be expected, we have found that as each tranche of claims is settled, remaining claims represent increasingly technical challenges.

There is significant diversity in the handful of claims that remain, with matters being disputed including dates and interpretation of restrictions, as well as pure quantum issues.

We expect that as we near deadlines for applications to be made to court on disagreements, there could be a small surge of applications being made. However, these are likely to be on varied matters and are unlikely to result in industry-wide consequences – excepting our example on furlough.

Key learnings for the sector have really got to be around the improvement that we can make in serving policyholders. For example, improving the time required by small business owners to compile requested documentation and accuracy of data.

To mitigate this, we have recently invested in open banking technology that gives commercial policyholders the option to share transaction data. We hope this will improve the BI claims experience of businesses – particularly in the small business sector.