(Reuters) – Judges in London have ruled that some of the world's largest insurers were wrong in rejecting tens of thousands of claims from small businesses affected by the COVID-19 pandemic, the UK Financial Conduct Authority (FCA) said on Tuesday. 19659002] The FCA, which brought the test case against insurers in a closely-watched trial estimated at 370,000 companies and billions of pounds in insurance claims, said the court had ruled in favor of policyholders' arguments on the majority of key issues in a complex, 162-page judgment.
The watchdog brought the case against eight insurers, including Hiscox Ltd., Royal & Sun Alliance Insurance PLC, QBE Insurance Group Ltd. and Zurich Insurance Group Ltd., in June to clarify whether 21
The supervisory authority has estimated that the case may affect more than 60 insurance companies and 700 different types of insurance because many insurances have similar wording.
However, the complexity of the judgment was emphasized by the response of the insurers' commercial body, the Association of British Insurance (ABI). The court said the verdict was "evenly distributed" between insurers and policyholders in the main issues.
Hiscox said that less than a third of the UK's 34,000 business breakdown policies would have to pay, meaning the net cost to the group would be less than £ 100 million ($ 129 million) – compared to initial guidelines of up to £ 250 million.
Its shares traded 12.6% higher at 1140 GMT.
The RSA said that some of its political interpretations had been upheld by the courts and some had not. However, its shares increased by 5% when it restored its canceled dividend from 2019.
The other six insurers did not immediately respond to requests for comment.
The policyholders, however, were jubilant.
"This verdict is exactly what we" We have been waiting for ", says Michael Kill, CEO of the Night Time Industries Association (NTIA).
" The forced lockdown since March has created unimaginable economic turmoil and stress for many entrepreneurs. This ruling provides some assurance that these companies will receive the payments they deserve to help them survive this period. "
Other policyholder groups called it a" landmark victory. "
Small businesses – from cafes, wedding planners and beauty salons to event companies – said they encountered ruin after attempts to claim compensation for business losses during the deadly pandemic, which has led to the strictest government restrictions in peacetime history, were rejected by insurers2. ] Some have signed d up to parallel class actions claiming that legitimate claims have been rejected, but the FCA case offered a new legal route by merging a group of corporate policies and taking insurance companies to court with minimal costs for companies.
The case was designed to quickly clarify whether the pandemic and a state shutdown in March would trigger business.interruption policies covering when insured premises cannot be used due to restrictions imposed by a public authority and in the event of a notifiable illness or infection.
Insurers have claimed that most insurances did not cover the pan demin, that they paid out valid claims as quickly as possible and that being forced to blunt all losses from the pandemic would be disastrous for the insurance industry and its reserve, the reinsurance industry.
If the verdict is appealed, it can jump directly to the Supreme Court, the highest British court, to reduce delays for exciting companies, lawyers say.
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