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Law360, London (September 21, 2020, 12:23 PM BST) -- Insurers are facing increasing pressure from the U.K.'s financial regulator and claimant groups to pay up after a court ruled last week they are liable to compensate businesses forced to close during the lockdown.
The Financial Conduct Authority wrote to insurance bosses on Friday to urge them to "settle claims quickly" if they didn't plan to appeal the judgment. Meanwhile law firm Mishcon de Reya LLP said on Sunday it is seeking to challenge 12 insurers for payouts on behalf of policyholders.
Insurers face additional pressure from the U.K.'s financial regulator and claimants' groups to move forward with business interruption claims over the lockdown after losing a key test case. (Chris Ratcliffe/Bloomberg via Getty Images)
"It is important that insurers reassess and settle claims quickly, including making interim payments wherever possible on policies where the legal process is complete or the claim has been accepted in full or in part," Christopher Woolard, interim chief executive at the FCA, said in the letter.
Woolard said insurers should reflect on the judgment and "irrespective of any possible appeals" consider how they can push claims forward.
"This should include taking all reasonable steps to ensure that all those claims are ready to be paid and settled at the earliest possible opportunity after any relevant appeals," he added.
The test case involved 21 policy wordings, used by eight insurers. Mishcon said on Sunday it wanted to hear from policyholders who had one specific wording, drafted by broker Marsh inc.
The law firm said that specific wording, known as a "resilience" policy, was used by at least 12 other insurers. It is now considering a group action on behalf of policyholders.
"We know that many of these insurers have told resilience policyholders that they are not covered when the High Court has now made it clear that they are," said Mishcon partner Sonia Campbell. "We are inviting any resilience policyholders insured by any of these insurers to get in touch."
Mishcon was allowed to intervene in the test case on behalf of Hiscox policyholders and businesses in the hospitality sector. It said last week it is considering another group arbitration claim against insurer QBE on the back of the FCA's judgment.
--Editing by Rebecca Flanagan.
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