Insurance Firms Told To Pay Out By Supreme Court
Small business owners across the UK are sighing with relief as The Supreme Court rules that insurers will have to pay out on business interruption claims. Many businesses which have been severely affected by the pandemic and subsequent restrictions will receive payouts soon.
Supreme Court Verdict
The case was brought to the Supreme Court by six of the world’s biggest insurance companies – RSA, QBE, Argenta, Hiscox, MS Amlin and Arch.
This was after a September High Court Judgement. Judges threw out the appeal from the insurance firms and have urged insurers to pay out quickly.
The claims have been estimated to value around £1.2 billion but many experts think that it will be more. Evidence from the Financial Conduct Authority showed how many businesses had been turned down when they claimed on their business interruption policies.
Boost For Businesses
With so much bad news for businesses this past year, this ruling is a welcome relief for around 370,000 companies who have been affected.
The case was hailed as a victory by the Hiscox Action Group which was formed to represent 400 claimants who had been affected by the pandemic and had claimed against Hiscox policies.
From cafes to gyms to boutiques to hair salons, this ruling will affect hundreds of thousands of businesses and their employees too. Businesses across the UK will now have more confidence claiming on their insurance policy and accessing finances to support their business through the crisis.
Issues For Insurers
However, it isn’t good news for everybody and insurance companies and investors are worried. Shares in the insurance firm Hiscox fell by a huge 6.3% after the Supreme Court ruling, but it did settle to around 4%.
Other insurance firms saw falls, such as RSA which was down by 0.08% and Prudential which was down by 0.6%. However, these losses are relatively small.
The law firm Reed Smith claimed that the verdict was ‘a catastrophic outcome’ for the insurance industry. The complex case covered around 700 types of policies from more than 60 insurance companies and has provided clear instructions to insurers to payout.
As the case has been thrown out by the Supreme Court, insurers are going to have to listen.