The number of legal disputes between companies and their insurers ending up in the High Court has almost trebled since before the pandemic, according to new research.
The findings will intensify accusations that corporate customers are being let down by insurers taking a hard-nosed approach to payouts.
The findings — from Mactavish, a buyer of outsourced insurance and a claims resolution expert — show the rise was led by claims on business interruption policies relating to Covid. The number of such disputes was up by 14% in 2022.
Big-name litigants taking on their insurers include two of London’s biggest Premier League football clubs, Arsenal and Tottenham Hotspur, alongside their Merseyside rival Liverpool, as well as the national restaurant chain Pizza Express.The court clashes come as businesses are struggling to get back on their feet after the twin shocks of the pandemic and the cost-of-living crisis.
Mactavish’s CEO Bruce Hepburn called the findings of the index “really worrying,” adding: “Many of these disputes should simply not be going to court. When you buy an insurance product you expect to be protected from loss, not exposed to further costs and delay.
“Insurers are prioritising their own interests over those of their clients, rebuilding their balance sheets to the detriment of customers who are being forced to seek declarations from court in order to get paid”.
Before 2019, the number of claims ending in the High Court was stable at around 30 a year. Mactavish found it reached 82 in 2022.
After Covid struck, insurance entered what’s known as a “hard market”, when higher premiums and an even tougher approach to payouts is taken in response to a spike in liability.
High prices for cover are also hitting hard-pressed households. An index by Consumer Intelligence found the average premium for a building and contents policy was up nearly 7%.
Another big area for disputes was claims for loss of aircraft in Russia following the war in Ukraine. There was a flurry of claims on the anniversary of the invasion, with 20 being filed that day, because insurers require an asset to be missing for a year before a claim.
In response to Mactavish’s findings, industry body the Association of British Insurers said: “The insurance industry is committed to supporting its customers and paying out all valid claims as quickly and efficiently as possible, with £22millon paid out through business insurance policies every single day.
“Given the unprecedented circumstances arising from a global pandemic, insurers supported the fast-track legal process to bring clarity to a number of complex issues for the sake of their business customers and we have worked closely with our members to ensure best practice in claims handling.”
