Business insurance claimants face delay pending possible appeal

Business interruption policy claimants are facing delays into 2021 after a 'leapfrog' application to appeal to the supreme court was filed by the Financial Conduct Authority (FCA).

The application for an appeal, made by seven of the eight insurers involved in the test case, will come as a blow for businesses who had been hoping for swift pay-outs following the high court's landmark ruling.

The FCA confirmed it had filed the application despite believing that “clarity was provided” in the initial judgment handed down on 15 September. A decision on the appeal application will be announced on Friday.

It was widely anticipated that the landmark ruling, while welcomed by industry bodies, would be appealed by some or all of the insurers involved.

The FCA said it would continue to work “closely and at speed” with the eight insurers and two intervenors that participated in the test case to reach an agreement in principle on a range of issues in the hope an appeal process will not be required.

Sonia Campbell, partner at Mishcon de Reya, who is representing Hospitality Insurance Group Action and led its participation in the test case, told The Caterer: "The FCA test case was designed to provide clarity and certainty to policyholders whose businesses have suffered financial loss as a result of the Covid-19 outbreak.

"At this stage, we know that rather than starting to pay claims now – even on an interim payment basis – and instead of accepting the judgment of the High Court – seven of the eight defendant insurers have filed precautionary application notices to protect their positions in relation to a possible leapfrog appeal directly to the Supreme Court.

"We will wait to find on Friday whether some or all of the insurers are granted permission for a leapfrog appeal to the Supreme Court (subject also to the Supreme Court's agreement to hear any appeals)."

Campbell said that she would continue to assist affected QBE and Resilience policyholders to press the insurers "to do the right thing now", by starting to pay claims "to get funds flowing in the right direction".

Following the government-enforced closure of hospitality businesses in March, insurers denied many insurance claims. In response several action groups were established to appeal the decisions. It was hoped that the high court ruling would see claims progressed.

It is believed that around 700 types of policies affecting 60 different insurers and 370,000 policyholders could potentially be affected by the test case.

Image: Shutterstock