So far, according to the ONS, 24% of businesses in the UK have temporarily closed or paused trading. And, in the entertainment and recreation sector, this figure is 82%.
The Association of British Insurers (ABI), says it’s had record claims. This includes small and large businesses, as well as individuals claiming for cancelled trips, weddings, and events.
Why are claims being rejected?
At the moment, many firms are having claims rejected as they are only covered for business interruption insurance – which doesn’t cover infectious disease pandemics. There have been reports of many businesses struggling to get money back from insurers.
Commons Treasury Select Committee chair Mel Stride says: “The Committee continues to receive evidence concerning the difficulties that firms are facing in making a successful claim. For example, [Pub and dining firm lobby group] UKHospitality told us that 71% of its members have had claims rejected, with only 1% having any success.”
She adds: “There may be many instances where individuals and businesses believe they are covered, but in reality may not be.”
“However, we are concerned that the insurance sector goes the extra mile in meeting claims wherever possible. For example, where there may be grey areas within policies.”
How much will be paid out?
The ABI has estimated that around £900 million will be paid out to firms that are covered by infectious disease insurance. Although, it says this could rise to as much as £1.2 billion.
However, due to the rising number of disputes between businesses and their insurances, it’s still unclear what the final figure will be in reality.
ABI chief executive Huw Evans says: “Most business interruption insurance policies that most businesses have are very much designed to protect them from fire and floor every day risks that protect their businesses and in the small number of cases it’s designed to cover illnesses that come on your premises for a short duration they’re not intended and not priced to cover a global pandemic.”
MP’s have urged insurance companies to be fair with claimants, although it will be costly. If not, companies have been advised they can take their claim to the Financial Ombudsman for a second judgement or appeal.