Did The Covid19 BI Claims Dispute Really Damage Reputations?

This is an interesting view from GlobalData but their own survey shows how pricing remains the number on consideration for private companies, with the lack of specific business activity coverage being another bugbear. Most of Covid BI claims were centred around hospitality, which is a big sector, but not the entire business sector. Many other businesses like supermarkets, car dealers, PR agencies, food/package delivery, fast food franchises and many more actually did very well from the Covid lockdowns and the WFH paradigm shift.

Here’s the word from GlobalData;

Following the news that insurers including Aviva and Liberty Mutual are all being pursued over failing to settle COVID-19 related business interruption (BI) claims;

Benjamin Hatton, Associate Insurance Analyst at GlobalData, offers his view:

“Business interruption cover is a complex policy, with a crisis such as a coronavirus pandemic highlighting the ambiguity in policy wording that has driven the surge in court cases. New BI cases continue to filter their way into the courts and as these cases continue, it is likely that policyholder trust in their provider, perhaps even in the wider industry, has diminished with many SMEs looking to switch provider or cancel altogether. In fact, 36.8% of SMEs that cancelLed their BI cover in 2022 did so as they did not receive the level of cover they had thought they would get.

“When asked why SMEs chose to switch provider for BI cover, the new provider’s pricing consideration, level of cover, and reputation could not be separated as the top reasons for switching. For reference, GlobalData’s 2022 UK SME Insurance Survey found that reputation was important to just 8.8% of SMEs switching public liability provider and 8.5% of commercial property switchers. Almost a third of SMEs switching in these two lines cited pricing as the main reason for changing insurer (32.1% and 33.1%, respectively).

“Insurers looking to grow business in the BI line must ensure greater clarity in policy wordings if they want to maintain a reliable reputation and stem the tide of cases filed against them. The continuation of court cases involving BI payouts will blight new business opportunities for insurers caught up in the ongoing legal battles. It is likely that many policyholders are now reconsidering their provider and looking to purchase a policy from those deemed less likely to take matters through legal proceedings.”