Business Interruption Insurance Claims: do you have a claim?
On the 15 January 2021, the UK Supreme Court delivered its judgment on the Financial Conduct Authority Business Interruption test case against a number of insurance companies including:
- Arch Insurance
- Hiscox Insurance
- MS Amlin
- QBE Limited
- Royal & Sun Alliance Insurance
The impact of the judgment is far-reaching and small businesses may now be able to have their Business Interruption claims reassessed or a new claim submitted for consideration by their insurer.
The key policy clauses considered in the test case include:
- Disease clauses;
- Prevention of Access; and
- Local Authority/government closure
To read a full analysis of the test case, please read our earlier blog post here.
Update from the Financial Conduct Authority (“FCA”)
The FCA has published a “Dear CEO”letter to insurers following the recent decision in the Supreme Court Test Case.
The Dear CEO letter emphasises that “clear, accurate and timely Communication is crucial” between insurers and policy holders. The Dear CEO letter has also made clear that where insurers have policy wordings affected by the test case, they should reassess all potentially affected complaints, including those they did not fully uphold. The FCA also outline that Business Interruption clauses which cover infectious and notifiable diseases along with non-damage denial of access and public authority closures provide cover for the events resulting from the Covid-19 pandemic.
The FCA guidance also refers to the type of evidence that policyholders can rely on to support their claims: for disease clauses this can include proof of positive Covid-19 tests in their location, NHS death data for NHS Trusts and reported cases within the area covered by the policy.
The Financial Ombudsman Service (“FOS”) may also accept jurisdiction to hear a complaint.
What is the Financial Ombudsman Service?
The FOS is an ombudsman service which settles disputes between consumers and businesses which provide financial services, including insurance companies.
Who Can Make a Complaint to the Financial Ombudsman Service?
In order to make a complaint to the FOS, as a business you must first satisfy the following criteria:
You are either an individual or a business which is classified as a ‘micro-enterprise’, meaning:
- You employ fewer than 10 people; and
- Your business has an annual turnover or a balance sheet that does not exceed €2million
The FOS is also able to assist small businesses, for which the criteria is:
- Your business is not a micro-enterprise;
- Has an annual turnover of less than £6.5 million; and
- Has a balance sheet total of less than £5 million, or employs fewer than 50 people.
Furthermore, you must have received a final decision from your Insurance Company in relation to the Business Interruption clauses within your policy. The time limit for complaining to the FOS following a final decision from a business is 6 months., If you do not make your complaint within this period, you will be time-barred and unable to make a complaint. It is therefore important that, upon receiving a final response from your insurer, you obtain legal advice in good time before the 6-month period expires. However, some limited exceptions do apply in which you may still be able to bring a complaint following the expiry of that 6-month period:
- The delay is due to exceptional circumstances – such as being seriously ill during the time when the complaint should have been referred;
- The respondent business did not send a valid final response; or
- The respondent business agrees to the FOS being involved after the six-month time limit.
If you are successful then the FOS can make a binding award for compensation up to £350,000. If your loss exceeds that figure, the FOS may recommend that a payment over the £350,000 limit is paid, although that recommended aspect of the decision would not be legally enforceable.
If you are not eligible to make a complaint to the FOS, you can still potentially litigate and use the court process to secure payment pursuant to the terms of your insurance policy.
The FCA has a dedicated webpage on Business Interruption Insurance for further guidance. What is clear is that insurers should not take the Supreme Court decision lightly and the issues surrounding Business Interruption policies are complex, with the potential to create ongoing uncertainty for both customers and firms.
How Can Ellis Jones Help?
Ellis Jones’ Banking & Finance Litigation solicitors have specialist knowledge and expertise across a broad range of areas. We act for a broad range of commercial clients in disputes with financial institutions and have recovered in excess of £60 million on their behalves.
If you feel you may have a valid business interruption insurance policy covering Covid-19, and are unhappy with a decision from the insurer on your claim, please contact either Paul Kanolik or William Fox Bregman or our Banking and Financial Litigation team by calling 01202 057733 or by email at email@example.com. We offer proportionate and transparent fee structures to help with your claim and can progress a FOS complaint or court claim against your insurer on a ‘no-win, no-fee’ basis subject to the merits of your dispute.