Covid insurance battle: 38% of approved claims still unpaid by insurers
Some 38% of policyholders told they were entitled to insurance payouts for coronavirus disruption have yet to receive payment, according to figures released by the Financial Conduct Authority (FCA) this week.
The watchdog said insurance companies have paid £636.7m in final settlements and £331.2m in initial payments for unsettled claims as of 5 August, bringing the total to almost £1b.
But many providers are still being slow to pay out, as over 15,400 policyholders who have had claims approved are yet to receive any compensation.
A total of 41,666 businesses had their claims accepted by insurers but only 26,238 (62%) have received at least one interim payment.
The latest FCA figures come seven months after a fight over business interruption insurance escalated to the Supreme Court, which found in a test case in January that certain types of policy should pay out for Covid disruption.
However, hospitality operators have since accused insurers of "dragging their heels" over payments with many pursuing further legal action over the issue.
The FCA data showed some providers have been slower to pay than others. Hiscox Insurance Company has accepted claims from 9,180 policyholders, the highest number recorded by the FCA, but has only made interim or full payments to 3,945.
MS Amlin has made 1066 full payments on the 3,849 claims approved across its MS Amlin Insurance SE and MS Amlin Underwriting firms, while partial payments have been made to 280 policyholders.
Insurer Axa, which is being taken to court by restaurant group Corbin & King, has made final payments to 1,457 of its 3,095 approved claims and interim payments to 533. It has yet to make a decision on 114 cases.
Michael Kill, chief executive of the Night-Time Industries Association (NTIA), said: "I am not sure whether to applaud or be angry at the release of figures from the FCA on insurance claim payouts nearing £1b, given that it should have been more."
"[It is] frustrating that the legal process took a considerable amount of time to come to a close, and in that time our sector lost many claimants, which in turn reduced the exposure to insurance companies… while the very businesses that refused to pay out are making money back with rising premiums."
He added that the government-backed live events reinsurance scheme announced this month, designed to cover costs where events are cancelled due to Covid restrictions, was not enough to help businesses.
"[The scheme has] been met with muted frustration of too little too late, and the feeling that it's not something that is affordable for much of the sector, with many feeling it presents a false economy."
Image: Philip Bird LRPS CPAGB / Shutterstock
