£1bn excuse
That’s how much businesses claim they are owed by insurance companies who won’t pay out over Covid. So what does the industry say? The answer may make your blood boil
YESTERDAY, insurers tried to justify their refusal to pay business interruption claims worth £1billion during the coronavirus crisis by insisting policies were ‘never intended’ to cover global pandemics.
Tens of thousands of small and medium-sized companies face bankruptcy after being denied the financial lifeline, even though they spent years paying for policies that promised to provide protection against temporary closure caused by outbreaks of a ‘human contagious disease’.
But in an interview with Money Mail, Huw Evans, director general of the Association of British Insurers (ABI), claims the cover does not apply to the coronavirus, as ‘no insurance industry in the Western world’ provides cover for pandemics as standard.
Businesses would have been charged a hefty premium if insurers had meant for an event such as the Covid-19outbreak to be included in premiums, he insists.
Money Mail revealed last week how hundreds of thousands of jobs are at risk as companies face ruin because of the non-payments. Taxpayers are already footing a huge part of the bill after firms denied the financial protection were forced to put more staff on furlough.
Lloyd’s of London underwriter Hiscox, FTSE 100 giant RSA and Australia’s QBE are among insurers that sold business interruption policies promising to pay if companies were forced to shut because of a notified human disease. In most cases the payout would be worth about £100,000.
But Mr Evans says it was ‘not selfevident’ that these policies applied to closure caused by the coronavirus.
‘We have never claimed these policies would cover a global viral pandemic,’ he says. ‘We have not, as an industry, charged for that cover and did not intend it ever to be covered. If people had paid a premium, I’d understand. But they have not.’
Mr Evans says he has ‘absolute sympathy’ for firms facing ruin and accepts that the outcry will harm his industry. ‘This is a genuine disagreement in good faith. It is not insurers cynically trying to deny paying out.’
Campaign groups, some including more than 500 businesses, are organising legal action against insurers, and the Financial Conduct Authority has promised to bring cases before a judge to get a resolution.
Mr Evans says the ABI has worked ‘very hard’ to get such cases resolved ‘as quickly as possible’. Campaigners warn that many businesses may go bust before the legal row is over.
Lord Grade, former chairman of the BBC and executive chairman of ITV, complained this week that insurers in the U.S. and Germany have paid out to theatres forced to close because of the coronavirus, while in the UK the claims have been refused.
He said: ‘Are there no depths to which insurance companies will not stoop to avoid paying out? I cannot believe the insurance ombudsman and the courts will not see through all this the shameful wriggling.’
London-based Gurinder Madhan, who owns four craft shops, says he may lose his whole business after his claim was turned down. The 44-yearold paid £2,700 a year for his business insurance policy with Hiscox.
But his claim was rejected, despite the policy saying he would be covered if he were forced to close his Ultimate Craft shops after ‘an occurrence of any human infectious or human contagious disease’ and if ‘an outbreak had been notified to the local authority’.
The father of two adds: ‘It just feels like corporate greed.’
A Hiscox spokesman says: ‘We don’t comment on individual claims but, as the FCA has said, most UK small business policies across the industry do not cover pandemics.’