Insurers have paid out almost £1bn in claims to businesses that were forced shut during nationwide lockdowns, according to the latest figures released by the Financial Conduct Authority (FCA) this week.
Insurance companies paid out £637m in full settlements to policyholders with cover for business interruption since January as well as over £309m in interim payments, brining the total to £946m.
But the total payments for claims could be higher still, as more than 38 per cent of businesses, that have had their claims accepted, have yet to receive any form of compensation, according to FCA data.
While more than 26,200 out of almost 41,700 policyholders, that have had claims accepted, have received at least an interim payment from their insurer, over 15,400 policyholders have yet to receive any payment.
The latest figures follows a UK Supreme Court ruling in favour of policyholders in a test case on cover for business interruption which took place seven months ago.
The regulator brought a High Court test case against eight insurance companies in 2020 for a ruling on whether policies on business interruption with controversial additional clauses would offer cover against closures necessitated by lockdowns ordered by the UK government.
But in January the Supreme Court ruled that insurers were liable in most cases, especially when a policy offered cover for closure as a result of an outbreak of infectious disease.
“We remind firms of the need to handle claims promptly and fairly and to provide reasonable guidance to help a policyholder to make a claim,” the FCA said.
Hiscox Insurance Company Ltd had 1,897 unsettled business interruption claims where only an interim payment has been made to the policyholder – the highest in the FCA data. In addition there were almost 2,500 claims which Hiscox has yet to make a decision on. The insurance firm also accepted over 9,000 claims – the largest – for Covid-19 related losses.