The High Court judgment will only help some, and in a limited way
The ruling for the FCA’s test case is not the great solution in resolving customers’ outstanding business interruption claims.
It is helpful and will speed up claims, but there are two big issues outstanding.
The first is that insurers will only start paying claims on certain policies.
As Mactavish points out, the FCA only considered two sub-aspects of business interruption: disease and prevention of access.
A very large number of policies will fall outside that scope.
Secondly, even when an insurer agrees to pay the claim, there will be squabbling over the quantum.
It is a grey area that has potential for conflict.
Blame
The whole episode has been an unedifying experience for insurers, but brokers and MGAs delegated responsibility to craft policy wordings must accept some blame as well.
It is not good enough to say this was an unexpected once in a lifetime event.
It should have been clearly explained from the beginning about the limits of business interruption coverage. Too many clients were left in the dark.
Delegated brokers and MGAs, more than anyone else, should know their policies inside out.
There is also the problem that broking has become a churn.
There is a sizeable proportion of brokers driven by getting the sale done as quickly as possible. Advice slows down the race for profits.
E-trading, for all its benefits, has made it easier than ever to churn through SME clients.
We can only hope this pandemic has been a lesson and a wake-up call to everyone.
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