Insurers: Time to cough up?

Business interruption claims are on the rise

Thousands of businesses in the UK have been adversely affected as a result of the ongoing COVID-19 pandemic. Despite this and the UK government’s reassurances, many insurers have refused to pay out against business interruption claims.

The Association of British Insurers recently warned that most British companies would not be protected by their insurance policies and that policies covering “infectious diseases” are rare. Even where businesses have paid for additional coverage for this type of occurrence, insurers are still refusing to pay.

The FCA is now bringing legal action again a number of Europe’s largest insurers to establish whether they should pay out in relation to pandemic-related business interruption claims. The eight-day test trial commenced last week in the High Court.

The FCA is to consider the wording of policies from eight insurers including the likes of Hiscox and Zurich to establish whether or not they cover the virus. A successful outcome could lead to a wave of potential claims being seen for losses incurred as a result of COVID-19.

The Roffe Swayne forensic accounting team has deep and varied experience of business interruption claims, having acted for claimants, insurers and (unusually) as a single joint expert in relation to a claim brought by both claimant and insurer and being resulted by the Insurance Ombudsman Service.

We understand the need to demonstrate causation (that losses being claimed for were caused by the pandemic rather than being coincidental to it) and to evidence that losses have been mitigated to the extent possible (for example through using the government’s furlough and tax deferral schemes).

business interruption claims

In the past few years we have been involved with claims relating to the following industries:

  • Estate agency
  • Hospitality
  • Commercial and residential property
  • Public relations
  • Pharmaceuticals
  • Plant hire and haulage
  • Graphic design
  • Hair & beauty
  • Energy
  • Waste disposal
  • Alcoholic beverages
  • Marine ecology

At present many business interruption claims will be in their infancy – there is always a trade-off between bringing a claim too early (such that it can’t be adequately evidenced) and too late (where the business is unable to survive).

The result of the FCA’s test case will be pivotal in determining whether these cases can proceed and, in the event that they can, our team is well placed to assist claimants in preparing robust quantum claims and insurers in reviewing and challenging these claims. Experience of working on both sides of the coin (and (once) in the middle) means we have a well-rounded viewpoint and can anticipate challenges from all angles.

For more information

For more information, please contact either Kate Hart or Victoria Smart or call us on:

01483 416232