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Law360, London (October 14, 2020, 3:45 PM BST) -- Insurance professionals fear the High Court case brought by the City regulator over payment of claims to businesses forced to close during the pandemic lockdown has undermined trust in the industry, a poll released on Wednesday by a standards body suggests.
The Chartered Insurance Institute said that two thirds of its members believe the test case, brought by the Financial Conduct Authority on behalf of an estimated 370,000 businesses denied payouts on their claims, has undermined faith in insurers.
The poll of 142 members in September found that 39% believed that trust in insurers was "somewhat reduced" as a result of the test case, while 29% believed it had been "greatly" reduced.
The judgment in the case found largely in favor of policyholders, although six of the eight insurers acting as defendants have appealed the ruling directly to the Supreme Court.
Keith Richards, chief membership officer of the institute, said the poll showed that insurers were aware that the public perception of the industry was "tied to not just their actions but the actions of everyone involved in the market."
Business valuation consultancy Brand Finance said in May that insurers could face severe damage to their reputations as a result of their response to the crisis. The top companies risked seeing $100 billion shaved off the value of their brands.
The institute, which sets professional standards for the industry, published a set of recommendations in September for insurers to follow over claims linked to COVID-19. The guidance suggests that insurers should agree common meanings of standard policy wordings and communicate that to policyholders.
"We are pleased to see many of these actions have been followed, and we hope that the recent judgement will be a catalyst for the sector to take further action, where it is needed," Richards added.
The decision by insurers to appeal the test case has attracted criticism from groups of policyholders, with claimant law firm Mishcon de Reya LLP saying the move was "disgraceful."
--Editing by Ed Harris.
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