Top Class Actions’s website and social media posts use affiliate links. If you make a purchase using such links, we may receive a commission, but it will not result in any additional charges to you. Please review our Affiliate Link Disclosure for more information.
Approximately 370,000 small firms in the U.K. will be receiving insurance claim payouts after the High Court ruled in their favour in the Financial Conduct Authority (FCA) test case.
The firms may be receiving up to £1.2 billion, according to The Guardian.
The coronavirus pandemic hit small companies hard, and they were forced to close during the lockdown. Now hundreds of thousands of them involved in the FCA test case will be receiving their insurance claims.
According to the FCA, the affected firms should be contacted by their insurance companies by next week.
During the initial stages of the coronavirus pandemic, when businesses were forced to close and suffered losses, many insurance companies refused to pay out on business interruption claims. By July there were 400 firms complaining to the financial ombudsman about being denied insurance coverage for business interruption.
Insurers argued that business interruption insurance did not cover lockdowns authorised by the government.
The FCA took action due to the high volume of blanket denials.
The FCA test case was launched to provide transparency for companies making claims for business interruption and being denied. The Court examined 21 insurance policies from eight insurers.
The insurance companies fought back, asserting that if the Court ruled in favour of the policyholders, it would be unlawful. The insurers stood by their legal conditions.
The High Court’s judges ruled that disease clauses in some of the business interruption insurance policies should have covered the policyholders during the coronavirus pandemic, according to the BBC.
However, while the FCA test case was one of the most compelling in years and the High Court ruled in favour of the policyholders, the FCA warns that all of the insurance policies might not offer a payout.
The ruling did not say insurers are liable across all 21 types of policy wording in the sample considered by the Court, The Guardian reported.
According to the BBC, the insurance companies will have the option to appeal the Court’s ruling.
Some insurers may want to appeal, but that is unclear so far. Insurer Hiscox said the company has not made a decision on an appeal yet, according to The Guardian.
Some of the insurance companies have arranged payouts for business interruption after previously denying coronavirus pandemic coverage.
Hiscox Action Group, which represented businesses insured through Hiscox, and the Night Time Industries Association (NTIA) joined the FCA test case as claimants. They were pleased with the ruling.
“This verdict is just what we’ve been waiting for,” NTIA chief executive Michael Kill said, according to The Guardian. “The night-time economy has been one of the hardest hit by lockdown measures during the pandemic, and many businesses are grassroots, family-owned venues…This verdict gives some reassurance that these businesses will get the payments they deserve to help them survive this period.”
The FCA’s Christopher Woolard commented on the possible appeal of the FCA test case, saying: “Coronavirus is causing substantial loss and distress to businesses and many are under immense financial strain to stay afloat…Insurers should reflect on the clarity provided here and, irrespective of any possible appeals, consider the steps they can take now to progress claims of the type that the judgment says should be paid. They should also communicate directly and quickly with policyholders who have made claims affected by the judgment to explain next steps. If any parties do appeal the judgment, we would expect that to be done in as rapid a manner as possible in line with the agreement that we made with insurers at the start of this process.”
The FCA test case was an unprecedented action and a first for the FCA since its initiation in 2013.
Do you agree with the verdict in the FCA test case? Do you think insurance companies were liable to payout during the pandemic? Let us know how you feel in the comments.
Check back daily for the most recent U.K. class action lawsuit and consumer protection news.
ATTORNEY ADVERTISING
Top Class Actions is a Proud Member of the American Bar Association
LEGAL INFORMATION IS NOT LEGAL ADVICE
Top Class Actions Legal Statement
©2008 – 2024 Top Class Actions® LLC
Various Trademarks held by their respective owners
This website is not intended for viewing or usage by European Union citizens.
