About 370,000 firms in the UK are affected by a high court judgement that ruled companies should receive payouts on insurance claims after being forced to close down during the pandemic. They should hear from their insurer within the next week, said the Financial Conduct Authority (FCA). It estimated the value of policies to be at about £1.2 billion.
High court rules in favour of small businesses
Some insurers had refused to pay claims, stating they were not designed to cover government-imposed lockdowns. This prompted the FCA to launch a test case in the courts based on a sample of 21 policies from eight insurers: Ecclesiastical Insurance Office, Hiscox, MS Amlin, Arch Insurance, Argenta, QBE, Royal & Sun Alliance and Zurich.
The high court found in favour of the policyholders, although it cautioned not all policies would pay.
Michael Kill, the CEO of the Night Time Industries Association, said: “This verdict is just what we’ve been waiting for. The nighttime 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.”
Munich Re stops the sale of Covid cover for businesses
Meanwhile, German insurer Munich Re has stopped selling pandemic coverage to businesses after a €1.5 billion loss caused by Covid-19-related claims.
Torsten Jeworrek, Munich Re’s Head of Reinsurance, told Bloomberg: “We are currently examining whether we will offer new contracts that include pandemic protection in property and casualty insurance in the future. For the moment, it has been suspended, for example with respect to event cancellations.”
Lloyds of London had estimated in May that the insurance industry might see a loss of US$203 billion related to Covid-19.
“We will probably work through the majority of Covid losses this year,” Jeworrek said during his interview with Bloomberg. “This is also due to the fact that the insurance contracts concerned usually have a term of one year, and we are currently not issuing any additional pandemic coverage. So that should run out.”
In April, MunichRe had withdrawn its profit guidance, however, its solvency ratio has remained solid.