QBE has recently disbursed interest payments to small businesses whose claims for COVID-related insurance payouts encountered delays.
A report by The Guardian said QBE paid over £386,000 to 86 companies just before Christmas, setting the stage for other insurers to follow suit.
Around 60 insurers have come under scrutiny for delays in processing COVID-related payouts on business interruption policies, according to the report. The UK’s financial ombudsman responded to these delays by mandating an 8% annual interest rate on the sum, proportionally covering the period from claim denial to actual payment.
Industry insiders told The Guardian that QBE’s recent £386,215 payment could pave the way for similar payouts, with insurers poised to see costs of nearly £1.6 billion in interest to policyholders.
Some 370,000 small businesses made claims after the COVID-19 lockdowns rendered them unable to operate. While a significant portion of these claims were initially denied, the High Court ruled in favour of policyholders following a test case initiated by the Financial Conduct Authority in 2020.
Six of the eight implicated insurers lodged appeals, but the case remained in favour of policyholders when the Supreme Court ruled on the matter in 2021.
Businesses subsequently pursued compensation for delayed payments. One such case involved a dental practice whose business interruption claim was paid out after initially being declined. The financial ombudsman ruled that the practice should receive interest from QBE, its insurer.
QBE sought additional clarification on the ruling but eventually made the payment before the end of 2023, according to The Guardian.
“COVID-19 business interruption claims can be very complex,” a spokesperson told the publication. “As such, the claims handling process is sometimes unavoidably lengthened. Naturally, QBE always ensures that we comply with all our regulatory and legal obligations related to these claims, that we consider our customers’ particular circumstances and that we handle the claims in as timely a manner as possible.”
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