Last orders for Covid BI claims as hospitality urges FCA to step in

Litigation firm Stewarts, alongside the UK’s main hospitality trade bodies, has urged the Financial Conduct Authority to intervene as Covid-19 business interruption (BI) claims approach a March 2026 limitation deadline.

In an open letter to the regulator, Stewarts and associations representing more than 155,000 hospitality and leisure businesses called on the FCA to issue new guidance requiring insurers to continue paying valid Covid BI claims for a further two years, until March 2028.

The intervention was requested as most Covid BI claims in England and Wales are subject to a six-year limitation period, meaning many unresolved claims will begin to lapse from March 2026 unless court proceedings are issued or standstill agreements are reached.

Stewarts said fewer than 50,000 Covid BI claims had been accepted by insurers, despite the FCA previously estimating that around 370,000 policies could potentially respond following the regulator’s landmark test case. As a result, it warned that thousands of businesses remained significantly out of pocket more than five years after the pandemic.

The firm cautioned that, without regulatory action, unresolved claims could trigger a surge in litigation from policyholders able to fund legal action, further straining the court system. More critically, it said many small and medium-sized enterprises risked losing access to compensation altogether because they lacked the resources to bring claims before the limitation deadline.

Aaron le Marquer, head of policyholder disputes at Stewarts, said: “Five years of test case litigation has established that many policyholders whose claims were initially declined may in fact be entitled to compensation. It is vital that adequate time is now allowed for the latest court decisions to be implemented.”

Ongoing cases

A key issue remains the treatment of furlough payments in BI claim calculations. The Supreme Court is due to hear Bath Racecourse v Liberty Mutual in February 2026, which will determine whether insurers were entitled to deduct Coronavirus Job Retention Scheme payments from BI settlements.

Stonegate Pub Company’s subsidiaries most recently launched an £85m negligence claim against insurance broker Marsh, alleging the broker failed to arrange adequate business interruption insurance for their group during the Covid pandemic.

Le Marquer added: “In February 2026, the Supreme Court will decide whether insurers were entitled to take the benefit of furlough payments received by policyholders, and we are asking insurers to commit to following the Supreme Court’s decision regardless of whether claims would otherwise have been time-barred.”

The letter also highlighted ongoing uncertainty around ‘at the premises’ disease clauses and the evidence required to prove a Covid-19 occurrence at insured locations, an issue that has yet to be definitively resolved by the courts.

Stewarts and the signatory bodies, including UKHospitality, the British Beer and Pub Association and the Music Venue Trust, asked the FCA to issue guidance by 20 January 2026 to prevent insurers from declining Covid BI claims on limitation grounds while outstanding legal issues are resolved.