Property firms face battle over Covid-19 insurance payouts

Property companies hit hard by disruption during the coronavirus pandemic could struggle to make successful business interruption claims from their insurers, even if an upcoming high court case rules in favour of claimants. Insurance companies have come under fire for refusing business interruption claims linked to Covid-19. The Financial Conduct Authority is gearing up for high court action in July over whether insurers should pay out, examining policy wordings from 16 insurers including Hiscox, RSA and Zurich Insurance. But Katie Byrne, senior associate at Irwin Mitchell, said property companies may struggle to secure a pay out even if the FCA rules in favour of claimants. “It’s not going to be overly easy for tenants or landlords who haven’t got the requisite test wording,” Byrne said. “They are still going to have to demonstrate that their wording is either the same or very similar, or should or would be interpreted in the same way as the court has interpreted it. And that’s not an overnight job.” James King, senior executive at insurance broker The Clear Group, said insurers were “already on the back foot” in terms of paying out to property companies before coronavirus struck, with flood claims hanging over from the beginning of the year. Coupled with coronavirus disruption, property companies will see covers become more restrictive and premiums rise, King added. “Even if insurers do pay out for this, they will filter down [payouts] to try and recoup some of their money,” King said. “What will happen in the medium to long term is that there will be a reduced capacity, especially if some insurers go bust or have serious losses for this, and then the other insurers will put their prices up.” Damon Blakey, managing director of insurance broker Bullerwell, said a “hardening of premiums” happening prior to coronavirus would continue. “A number of key players in the sector were already warning [of] or putting through rate increases – it was already on the cards,” Blakey said. He added that, regardless of the FCA case, the government and insurance sector must find a long-term solution over policies and payouts on pandemic claims, describing this as “a new and unique impact” that the sector needs to address. To send feedback, e-mail lucy.alderson@egi.co.uk or tweet @LucyAJourno or @estatesgazette