Multiple leading insurers have U-turned on an initial decision to avoid paying out business insurance claims after the Financial Conduct Authority (FCA) approached 56 insurers, including each of the top five in GlobalData’s 2019 UK SME Insurance Survey. Eight insurers will be defendants in a high court test case. Business interruption is going through a period of change during COVID-19.

Insurers had recently stated that business interruption policies did not include pandemics, so when the COVID-19 outbreak was declared a pandemic, policies were not valid against this claim. This has been an extremely contentious topic, though it now appears that multiple insurers are willing to pay out having been challenged by the FCA.

GlobalData’s 2019 UK SME Insurance Survey found that the top five business interruption insurance providers for SMEs were AXA, Aviva, Zurich, Barclays, and Hiscox. As Barclays’ SME business cover is underwritten by Allianz, all five of the leading insurers in the UK are included in the FCA’s investigation. It is not yet known which insurers have U-turned on paying claims, but at the very least, these five players are under more pressure to do so as other insurers begin to pay out.

 

covid-19 business interruption

The five players alone accounted for 29.4% of the SME business interruption market in 2019. Therefore, the result of this case will have a significant impact on the insurance industry and small businesses around the country. Our 2019 UK Insurance Consumer Survey also found that the uptake of business interruption has been increasing over the past few years. It has risen from a penetration rate among SMEs of 11.1% in 2015 to 17.3% in 2019.

How well do you really know your competitors?

Access the most comprehensive Company Profiles on the market, powered by GlobalData. Save hours of research. Gain competitive edge.

Company Profile – free sample

Thank you!

Your download email will arrive shortly

Not ready to buy yet? Download a free sample

We are confident about the unique quality of our Company Profiles. However, we want you to make the most beneficial decision for your business, so we offer a free sample that you can download by submitting the below form

By GlobalData
Visit our Privacy Policy for more information about our services, how we may use, process and share your personal data, including information of your rights in respect of your personal data and how you can unsubscribe from future marketing communications. Our services are intended for corporate subscribers and you warrant that the email address submitted is your corporate email address.

This has turned into a lose-lose case for insurers, with them either having to pay out millions in claims or risk a severe backlash and reduction in trust from SMEs. However, those insurers who do pay out are likely to see their penetration rates for this growing product soar as wary businesses want to avoid further closures.