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(Reuters) — Britain’s markets regulator said on Wednesday it had failed to strike a deal with major insurers over prompt payouts to small businesses battered by the coronavirus pandemic, dashing hopes that a Supreme Court appeal could be easily avoided.
The Financial Conduct Authority set a Wednesday deadline for talks with insurers, such as QBE and RSA, to ensure eligible business interruption claims would be paid speedily, after the High Court ruled earlier this month that thousands had been wrongly rejected.
The regulator said it had hoped to reach an agreement with the insurers on the interpretation of some important elements of the judgment affecting “which businesses get paid and how much,” but conceded that the case was complex.
“We will continue discussions with insurers and action groups to find a solution which resolves the outstanding issues as soon as possible to enable pay-outs on eligible claims,” it said in a statement.
Businesses, from cafes to wedding planners and nightclubs, have said they face ruin after attempts to claim for business losses during the pandemic, which prompted a three-month national lockdown in March and a series of stringent restrictions since, were rejected by insurers.
Insurers disputed that many policies provided cover for the pandemic, saying this would otherwise be catastrophic for the industry.
The FCA and seven insurers have already applied for an expedited appeal in a precautionary measure to help resolve the case, that could affect 370,000 policyholders and billions of pounds in insurance claims.
The FCA brought the case against QBE Insurance Group Ltd., Hiscox Ltd., RSA Insurance Group PLC, MS Amlin PLC, Ecclesiastical Insurance Group PLC, Argenta Holdings Ltd., Zurich Insurance Group Ltd. and Arch Insurance Group Inc. in June to clarify whether 21 business interruption policy wordings covered government-ordered closures and disruption to curb the spread of the virus.
Most insurers did not immediately respond to questions for comment. Arch and Argenta declined to comment.
The FCA, which has been applauded for bringing the case on behalf of struggling businesses, has said it could affect more than 60 insurers and 700 policies because many have similar wordings.
The judges examined policies that cover losses when insured premises cannot be accessed because of public authority restrictions, in the event of a notifiable disease and hybrid wordings.
A London court hearing on Oct. 2 is designed to clarify how the judgment should be interpreted and pave the way for an appeal to the Supreme Court.
More insurance and risk management news on the coronavirus crisis here.
London judges have ruled that some of the world's biggest insurers were wrong to reject tens of thousands of claims from small firms battered by the COVID-19 pandemic, Britain’s Financial Conduct Authority said on Tuesday.