Insurers have been branded ‘shameless’ for trying to wriggle out of payments to small businesses battered by coronavirus.
Two High Court judges ruled earlier this month that insurers must pay out under most business interruption policies – types of insurance taken out by firms to protect their income if they are forced to close.
The judgment was heralded as a lifeline for thousands of struggling companies which had to shut their doors during lockdown, after most insurers had refused to pay out, claiming the policies were not designed to cover a nationwide pandemic.
Two High Court judges ruled insurers must pay out under most business interruption policies – types of insurance taken out by firms to protect their income if they are forced to close
But now seven insurance giants, including Hiscox and RSA, have lodged applications to appeal the High Court’s decision.
Firms from events companies to restaurants, who were relying on the insurance payout to help them survive the pandemic, fear for their future as they face more delays.
Kim Roe, who runs events business Circa Group based in Tunbridge Wells, holds a business interruption policy with Hiscox.
Despite being told by lawyers that her claim should be covered by the High Court judgment, she is still waiting for a payment.
She said: ‘It’s clearly a delaying tactic – people like myself are under a lot of pressure, and they’re hoping that because of that we’ll settle for a lesser amount.
‘It is shameless. A lot of people will go to the wall because of this. Insurers are acting like hyenas and waiting for everyone to drop off so they can pick at the bones.’
RSA, which made £492million in profits last year, said it would take an £85million hit if it had to pay out under business interruption policies.
Hiscox, which made £45million of profits in a poor year after a number of catastrophe claims, said the hit would be less than £100million.
The High Court case was brought by the Financial Conduct Authority on behalf of businesses affected by the pandemic, in order to decide whether insurers must pay out.
The FCA took eight insurers – Arch, Argenta, Ecclesiastical Insurance, Hiscox, MS Amlin, QBE, Royal & Sun Alliance and Zurich – to court to act as examples.
The judges ruled on September 15 that a majority of the 400,000 firms with business interruption insurance should have a valid claim.
But since then, insurers have been dragging their feet as they remain locked in talks with the FCA over how to pay policyholders.
Mike Cherry, chairman of the Federation of Small Businesses, urged insurers to ‘do the right thing by policyholders’.
Hiscox said yesterday that it ‘remains committed to an expedited resolution and today’s application, pending this hearing, preserves speed of process for all parties should there be an appeal’.
The FCA declined to comment.