Insurers should pay quickly after UK pandemic ruling: Watchdog

(Reuters) – Britain’s markets watchdog said on Friday it was “critical” that insurers pay valid claims in full at the earliest possible date, following a High Court ruling on business interruption insurance.

London judges 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, the Financial Conduct Authority said earlier this week.

The watchdog, which brought the test case against eight insurers, including Hiscox Ltd., Royal & Sun Alliance Insurance PLC and QBE Insurance Group Ltd., said the court had found in favor of policyholders’ arguments on the majority of key issues.

Insurers should make interim payments where possible, the FCA said in a “Dear CEO” letter published on Friday.

“Our objective remains to ensure that slow payment does not exacerbate financial pressures on policyholders,” the letter from Interim Chief Executive Christopher Woolard said, adding that the FCA could use its regulatory powers if it thought insurers were acting too slowly.

The lawsuit has attracted a lot of attention because it is estimated to affect 370,000 businesses, 60 insurers and billions of pounds in insurance claims.

Insurers should give policyholders at least an initial update on the implications of the judgment by Sept. 22, the letter said.

Separately, the FCA said the court would hear submissions on any applications for appeal on Oct. 2.

If the judgment is appealed, it could leapfrog straight to the Supreme Court to reduce delay for buckling businesses, lawyers said.