Lloyd’s of London chief executive John Neal said that he expects a recent UK judgment, which ordered some insurers to compensate businesses for losses due to the COVID-19 pandemic, to be appealed.
The High Court recently ruled that some of the world’s biggest insurers should not have rejected tens of thousands of claims from small businesses that suffered after the government-imposed restrictions to slow the spread of the virus.
The Financial Conduct Authority (FCA), which brought the case in June against eight insurers – including Hiscox, RSA, QBE and Zurich – said last week that the court had ruled in favor of policyholders’ arguments on a majority of key issues.
When asked at a conference held by insurance buyers’ association Airmic if he expected the judgment to be appealed, Neal said “yes,” and added that “cases run for a period of time” because of the complexity of disputes over policy wordings, Reuters reported.
Zurich and Ecclesiastical, a specialist insurer, said that the recent judgment proved they were right to deny claims, Reuters reported. But the FCA and other insurers, many of which have operations in the Lloyd’s market, have not yet announced formal plans to appeal on the points they lost. Both sides will have a chance to present appeal requests at a hearing on October 02.
The FCA said the case could impact more than 60 insurers, 700 different types of policies and 370,000 policyholders. Meanwhile, businesses, their lawyers and insurance brokers have called on insurers to pay claims as soon as possible. Law firm Mishcon de Reya, which represents the Hiscox Action Group of small businesses, said Thursday that it had contacted the FCA to demand it use its regulatory powers if insurers are dilatory in making payments.
The FCA has told insurers to make interim payments on policies where the legal process is complete, or if the claim has been accepted in full or in part, Reuters reported.