High Court BI ruling only ‘start of the battle, not the end’ warns Mactavish

Mactavish, the specialist outsourced insurance buyer and claims resolution consulting firm, this week poured cold water on the idea that the High Court ruling on business interruption (BI) cover for Covid-19-related claims was a significant victory for policyholders. The firm’s CEO Bruce Hepburn said this is actually “the start of the battle, not the end”. The firm said that it welcomed the ruling but stressed that its limited focus means that very few policyholders will be able to use it to achieve speedy resolution of their claims and obtain the cash from insurers needed to stay afloat in many cases. Mactavish said the remit of the legal case was far too limited and should have looked at a wider range of issues and policy wordings relating to Covid-19 BI claims. “While the headlines… suggest a great victory for policyholders, the reality on the ground will be very different,” the firm said in a statement issued on the day of the ruling. Mactavish said that, while a small proportion of the relevant claims cases may now settle, the vast majority will either be unaffected or be only marginally better off as a result of the judgment, with many legal hurdles still to overcome. The firm pointed out that the case only considers two sub-aspects of BI policies: disease and prevention-of-access wordings (and only some variants of them). Mactavish said the majority of companies’ claims will fall outside of the scope of the Financial Conduct Authority (FCA) action, and most policyholders are therefore no nearer to achieving resolution. Even where a policy is within the action’s scope, the FCA’s own press release confirmed this point, said Mactavish. It quoted the FCA statement: “The judgment does not determine how much is payable under individual policies… Each policy needs to be considered against the detailed judgment to work out what it means for that policy.” “The FCA seems to accept that significant roadblocks remain despite this judgment; Mactavish believes the FCA should now explain how it will go about clearing the way for the majority of SMEs to achieving a fair outcome,” added the firm. Mactavish also argued that the FCA should also have looked at the role played by brokers in the sale of these policies. “It says there is a separate but also sizeable minority of policyholders who would have had valid Covid-19 BI cover were it not for negligence on the part of their broker, but this issue has been overlooked,” stated Mactavish. Mr Hepburn said: “Ultimately, today’s decision just confirms that a selection of the claims that we felt should have been settled are now likely to be paid, but it gives little assistance to other claims that were not covered by the review. Policyholders and their advisers will now need to work out what today’s ruling means for their claims – for them, this is the start of the battle, not the end. The review did little more than look at a small subset of policies and claims, and then a subset of some of the obstacles to these being settled.” Mactavish said the FCA must now act as a “catalyst” for marshalling the insurance sector to pay out claims that are deemed valid as a result of the ruling as quickly as possible. “In practical terms, other than in a few specific cases, policyholders are now faced with the task of interpreting a very long and complex legal judgment – which may in itself be appealed – before taking up their specific case with their insurer. In reality, this means that having delayed taking these steps in the hope that the FCA case would bring clarity, they are about to embark on a lengthy and expensive journey to resolution. Some will have the means to pursue this, some will not, and some are no doubt already discussing closure,” said the firm. “With so many businesses on the breadline during this crisis, the one thing many don’t have is time. They need cash and they need it now. A lot now hinges on how the FCA uses its muscle to advance the interests of policyholders and hold the feet of insurers and brokers to the fire,” concluded the Mactavish statement.

High Court BI ruling only ‘start of the battle, not the end’ warns Mactavish

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