Successfully negotiating claims since 1867
The path the covid virus is tracking through humankind is well recorded and following the predictions of the medics and scientists who know it. And so it is with its vicarious progress through the insurance world. We have all been able to predict the business effects, the financial shock, and the responses of insurers to an exposure that few had ever planned for. We can’t say “had never expected”, for pandemic insurance has always been available at a price, as demonstrated by several successful multi-million-pound claims by sporting organisations.
But, if insurers want not to have to pay for pandemics, they know how to write their covers to express that intention. If they fail to do so, if they issue policies whose wordings admit losses, there’s no justification for specious and spurious defences. And that’s what we’re seeing now. Repudiations are coming in fast. Some are justified. Many are not. What’s disturbing is that on some of the unjustified there is – let us just say – a carelessness with the facts. For example, a claims management company confidently assuring its readers that the policy says the disease must have a direct effect on the business, when close reading of the wording shows nothing of the sort.
The policies that lend themselves to litigation are already the subject of wide publicity. The feasibility of legal action in these cases is dependent on the uniformity of wordings. They’re all the same. Many of the cases we see don’t have that advantage. Even the same insurer can have a couple of dozen wordings with differences between them in, for example, disease definition, non-damage denial of access, public emergency cover, general exclusions and numerous combinations of all those.
That makes it difficult to find affordable legal resources, when cases might have to be fought on a single contract basis rather than a class-style shared-costs action. Many of the businesses affected are SMEs, eligible to complain to the Financial Ombudsman Service. That’s why we’ve set up a FOS referral programme, details of which will be circulated within a day or so. And, of course, FOS uses fair and reasonable criteria for its decisions, which can be wider than a court would be able to apply.
As we write there’s a news flash that the FCA is “to seek legal clarity” on covid claims under business interruption policies: https://www.fca.org.uk/news/press-releases/fca-seeks-legal-clarity-business-interruption-insurance. We will be carefully following progress and shall be contributing to the FCA’s deliberations.