By Carolyn Cohn
LONDON, March 1 (Reuters) - Insurers in Britain have begun
making interim payments or settlement offers to businesses
disrupted by the COVID-19 pandemic after a high-profile January
court case, but concerns have been raised about low payouts,
with one business offered as little as 13 pounds ($18.14).
The UK Supreme Court dismissed appeals by insurers that said
business interruption insurance claims were not valid in a test
case brought by Britain's markets watchdog on behalf of
policyholders.
The Financial Conduct Authority (FCA) said the case could
affect 370,000 policyholders and 60 insurers, with the potential
for billions of pounds in claims.
Many small businesses had policies that enabled them to
claim a maximum of 50,000-100,000 pounds for disruption caused
by the pandemic and subsequent lockdowns.
However, East London cafe Woolidando told Reuters by email
that it had received a settlement offer totalling only 13
pounds, confirming a report in the Sunday Times.
A source from the Hiscox Action Group of policyholders said
he was aware of an even lower offer being made, while other
members of the group have yet to receive offers or interim
payments.
"We are paying claims as quickly as possible in line with
the Supreme Court judgment," Hiscox said in an emailed
statement. "In total, we expect to pay out $475 million in
COVID-19 claims, including for business interruption."
After the court ruling the FCA asked insurers to start
making payments quickly.
Six insurers, including Hiscox, were directly involved in
the case. Of the other five, RSA last week told Reuters it had
started making payments.
QBE on Monday said that it has also made payments
while MS Amlin said it had assigned a loss adjuster
to all open claims and was contacting policyholders.
Argenta, meanwhile, referred to a statement on
its website that it would apply the judgment in respect of all
outstanding claims.
The other insurer, Arch, did not immediately
respond to a request for comment.
SHORTFALLS
Michael Kill, chief executive of the Night Time Industries
Association, said some of the trade body's members had received
interim payouts of 25,000 pounds each or settlement offers for
the maximum 100,000 pounds permitted under their policies,
though their losses were even higher.
However, smaller businesses that have yet to receive offers
fear they might receive low payments while insurers not among
those directly involved in the court case are still contesting
liability, Kill said.
The FCA has also warned insurers against blanket deductions
of government support from money they owe to businesses.
Woolidando said part of the reason its settlement offer was
so low was that deductions were made for government furlough
payments.
"As (furlough payments) do not cover a loss incurred by the
claimant, (they) should not be included in any claim," the
Association of British Insurers said.
($1 = 0.7168 pounds)
(Reporting by Carolyn Cohn
Editing by David Goodman)
Hiscox (HSX)