5/26/2021 7:38:06 PM | less than a minute read

Business interruption claims. Could we be looking at 'the next PPI'?

Linklaters

After the FCA's test case, UK policyholders have been claiming against their business interruption insurance. The amount has totalled £470m so far.

Noted that the premise of the claims are ultimately different but in terms of scale, 'a total of £332.4 million was paid in December 2019 to customers in relation to PPI they were sold'. Reports also suggest that the total (cumulative) amount of PPI claims exceeded £50bn by 2020. By comparison, last June, the FCA's initial estimate of the total claims that could arise from the test case was £1.2bn.

The FCA have urged for business interruption payments to be dealt with quickly. However, there are still a large number of pending claims.

Do you think this will present a challenge for firms' claims handling obligations going forward?

More than 10,000 UK policyholders affected by January’s Supreme Court judgment on Covid-related business interruption insurance claims have already received some money, with the total paid out so far topping £470m. The Financial Conduct Authority, which brought the successful test case, released the first batch of data on Monday based on submissions from insurers — setting out how many claims relating to the case had been accepted and paid by the beginning of March. The data mark the first stage of resolution to a bruising dispute between some insurance providers and small and medium-sized companies over whether business-interruption policies should pay out for pandemic-related losses. Even industry executives concede the episode has done damage to the sector’s reputation.

www.ft.com/...