Insurers ‘deeply reviewing’ wordings as a result of ‘hot topic’ test case ruling

Insurers are “deeply reviewing their existing wordings and existing risk appetites” following the High Court’s unprecedented test case judgment this September, which ruled on the interpretation of business interruption (BI) policy wordings when applied to claims caused by the Covid-19 pandemic.

Speaking exclusively to Insurance Times, Peter Diskin, Gallagher Bassett’s chief client officer in the UK, explained: “I think insurers are deeply reviewing their existing wordings and existing risk appetites, so what are they prepared to write in the market, but also looking at their portfolios to see what the cost implications are as a result of the verdict.

“Everyone’s taking a step back and looking at the judgment and saying ‘well, where to? Where do we go from here?’”

On 2 October, the High Court agreed that the test case’s appeal process could leapfrog straight to the Supreme Court.

Describing this as a “hot topic”, Diskin added: “There’s a lot of money at stake, there’s a lot of really big issues to tackle. Not only is it the appeal for what’s on [insurers’] current books, but [it] also has implications on what wordings [are] required in the future and then where they take their businesses.”

Quantum jigsaw puzzle

In terms of the test case’s specific impact on Gallagher Bassett – a claims service provider – Diskin said it boiled down to delivering timely communications and continuing to validate the quantum of business interruption claims.

He continued: “We act as an extension for the insurer, so if the insurer is bound by a ruling or the finding that’s come down, we answer accordingly to that and take our insurers’ instructions.

“Specifically what we’ve been exposed to is the necessary speed to respond to policyholders as to where their coverage sits, whether it’s covered or it’s not covered in particular, and obviously then, where necessary, continuing to support insurers in validating the quantum of claims. That’s working out what claims are actually [worth], now we’ve got all the bits and pieces in the jigsaw puzzle together. Under the current circumstances, if a claim [is to] be paid, what would be the value of the claim and how can we get that resolved?”