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Law360, London (May 11, 2020, 5:41 PM BST) -- U.K. insurers should preempt the result of impending court battles over business interruption liability and pay claims now in order to restore trust, an open letter to the Association of British Insurers said.
The COVID Claims Group published an open letter addressed to the Association of British Insurers on Friday, which by Monday afternoon had received 668 signatories.
The group comprises businesses who have seen insurers issue near blanket rejections to business interruption insurance claims, even when companies had specific cover in place over disease outbreaks.
The Financial Conduct Authority will seek a High Court judgment this summer over the liability of insurers in a selection of policy examples, a move that the COVID Claims Group hopes could open the door to faster claims processing.
"The ABI's abrogation of responsibility has come as a considerable shock to SMEs that paid extra for extended business interruption cover," the letter said.
"We hope that the ABI may yet pre-empt the judgement of the court, make a resolution to honour extended [business interruption] claims, and so restore the integrity and reputation of your industry," it added.
A spokesman for the ABI did not immediately respond to a request for comment.
The trade body has previously said it expects its members will pay up to £900 million ($1 billion) in business interruption insurance claims, but said the majority of policyholders do not have cover in place.
The ABI has also said it is willing to work with the government in establishing a state pandemic reinsurance body, a proposal that took a step forward last month with the creation of a steering group under Pool Re.
The COVID Claims Group said it did not help businesses struggling at present. "Taking a similar approach with future pandemics is sensible and to be welcomed; it does nothing to remedy the present situation," the letter said.
Small businesses have faced rising losses as a result of a U.K.-wide closure of nonessential businesses. Several groups have emerged threatening group litigation against several insurers, with Hiscox alone facing a combined £50 million claim from more than 300 businesses.
--Editing by Alyssa Miller.
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