With the Covid-19 vaccine roll out taking effect, the country is starting to work its way back to some kind of normality. As the economy begins to turn faster, businesses are beginning to trade again and the impact of the lockdowns will start to show once businesses get to their year-ends and look at their finances. Each month, the FCA releases an update on insurers’ progress in paying out business interruption (BI) claims following the test case decision earlier this year. The number of claims paid is just over 50%. Some would say this is progress, as it is a challenge to handle, agree and settle so many claims. However, to those businesses waiting for a settlement, of which there are thousands, the impact could be existential. This threat to a client’s business can easily lead to an unhappy client looking to blame others. If their insurer doesn’t pay up, then why not look to blame the broker involved?

At Manchester Underwriting Management, we decided to provide Covid-19 cover where possible to brokers, both current and new. It means we are sharing the experience of brokers who have been on the receiving end of Covid-19 claims. There was a lot of speculation and rumour about ambulance-chasing lawyers and brokers taking the blame for insurance policies that don’t respond to Covid-19 BI claims. The rumoured tsunami of claims may not have crashed to shore yet, but we have certainly heard of brokers receiving letters from unhappy clients and their solicitors, and now we are seeing the beginning of litigation. One of the challenges when dealing with these matters is not only assessing the prospects of the claim being made and if the insured broker has made an error. It has been well documented that for most SME clients a commercial policy covering pandemics would probably be neither available nor affordable. But that doesn’t stop a claim being made and the cost of defending it is not insignificant. Solicitors charge by the hour and defending these claims can take a lot of time, not just for the insurer and the defending solicitor, but also the policyholder.

And let’s not forget the ‘normal’ claims that brokers have to deal with. A simple typographical error when keying in a sum insured or failing to tick the box to say the client wants BI cover. These haven’t disappeared. We are still working our way through Covid-19 and, as the experts keep saying, we need to learn to live with it. Not just health-wise, but also insurance-wise.