A London court is expected to rule on Tuesday in a case involving around 370,000 policyholders, corporations such as Zurich Insurance Group AG and Hiscox Ltd. and potentially billions of pounds in claims. The BRITISH market control body brought the case after small businesses struggled to obtain reimbursement from insurers for the losses suffered by the blockade.
“Insurers and regulators around the world will look at this case,” said Sarah Jane Mahmud, an analyst at Bloomberg Intelligence. The regulator “has never taken a step like this; it’s unprecedented. “
The Financial Conduct Authority is seeking a legal explanation of the disputed language of so-called business interruption policies to help determine when invoices deserve to be made. The resolution will be binding on the 8 insurers named in the case, and only for others with policies containing the wording, adding the case of Allianz SE, American International Group Inc. and Chubb Ltd. , according to the FCA.
The London case is one of thousands of legal battles around the world, focusing on business disruption policies that insurers say will not stop pandemics. In the United States, the New York-based Century 21 Stores sued several of its insurers for not paying about $175 million in claims, the cash the chain insists may have helped it bankrupt. In France, AXA SA agreed to cover the losses suffered through several hundred restaurants after wasting a lawsuit filed through an owner.
Given the number of policyholders potentially affected, and assuming everyone claims up to 20,000 pounds ($25568), the total charge can be successful at more than 7 billion pounds, analysts from Deutsche Bank AG wrote in a note of 8 September.
However, insurers may not face the biggest burden, as long as the reinsurance policies they have purchased to reduce their threat bear fruit, analysts say. “It is the reinsurers that have potentially more drawbacks, while corporations advantages any air compensation,” they wrote.
The case focuses on policy language examples that capture most of the key problems that may also be in dispute, according to the CFA. Given this approach, “it would probably be difficult at first to assess whether the overall result is net positive or negative for insurers,” Deutsche Bank analysts wrote.
The court’s decision, which can be appealed, will be the last word.
“Many commercial insurers say their policies differ substantially from the check case, and there will be others that will face demanding situations from insurers when it comes to testing and quantifying their loss,” said Samantha Holland, insurance director at law firm Gowling. . WLG. ” It is therefore realistic to expect a series of bitter disputes with insurers and a relentless era of uncertainty for policyholders. “
– With Lukas Strobl. com.
Photo: A walks past a store sign asking consumers to “apply inside” on 5 August 2020 in London, UNITED Kingdom. Many UK corporations have announced task cuts due to the effects of the pandemic and the closure of the coronavirus. (Photo via Leon Neal / Getty Images)
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