One year on from the FCA’s first publication of BI claims payment data, editor Katie Scott reviews the industry’s progress to date
Last January, the Supreme Court issued its determining verdict in the FCA’s business interruption (BI) test case, in the main following the footsteps already outlined by the High Court.
Once the dust had settled, many insurers then faced the mammoth task of organising great swathes of BI claims, distinguishing genuine claims from uninsured ones, all under the watchful – and impatient – gaze of the regulator and general public.
In March 2021, the FCA further held the insurance sector to account by initiating a monthly reporting regime, publishing the industry’s progress on paying BI claims. Last March, this included a total of 2,030 unsettled claims that had received interim or initial payouts to the aggregate value of £192,084,302.
At this point in time, 8,177 BI claims had confirmed a final settlement, to the aggregate tune of £279,823,468.
The FCA calculated that around 10,207 BI policyholders out of the 21,140 who had claims accepted by 3 March 2021 had therefore received at least an interim payment.
Fast forward a year and the regulator is still diligently reporting these monthly figures – although now, insurers have collectively shelled out more than £1bn in final claims settlements.
The FCA’s latest data – referencing figures collected on 7 February 2022 and then published on 16 February 2022 – shows that interim payments amounting to £307,867,384 have been made across 3,029 unsettled claims.
Meanwhile, for the 30,176 claims where final settlements have been agreed, an aggregated £1,006,918,766 has been paid out by insurers.
Therefore, the FCA calculated that 33,205 BI policyholders, out of the 42,307 who have had their claims accepted, have received at least an interim payment.
These figures show that Covid-induced BI claims are no where near being finished with, despite the UK being recently freed from pandemic restrictions – although within its 2021 year-end financial report, published on 18 February 2022, insurer Allianz confirmed that it had paid an interim or final payment on 96% of its accepted BI claims.
The industry should be prepared for more legal action around this as well – for example, Axa lost its recent High Court case against hospitality group Corbin and King, which was awarded £4.4m by the judge.
It feels as if the test case’s decisions will still need to be applied on a case by case basis, with plenty of wiggle room for setting legal precedents along the way thanks to the myriad of business models and niche sectors operating in the UK.
The BI battle is far from over.
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