ALEX BRUMMER: Insurers’ shameful attitude to Covid’s claims


ALEX BRUMMER: Insurers risk their reputation with their embarrassing attitude to Covid business interruption claims

Anyone who has dealt with insurers knows how difficult it can be to collect. That’s partly because they’ve been so hurt by fraudulent and exaggerated claims over the decades.

But insurers’ stance on business interruption claims as a result of the pandemic is unforgivable and puts businesses and livelihoods at risk.

The government has done its utmost to support companies with corporate rate cuts, VAT cuts, leave and municipal subsidies.

Sensitive: Insurers’ attitudes to business interruption claims caused by the pandemic is unforgivable and has put businesses and livelihoods at risk

The banks were quick to respond with Bounce Back loans and you might expect major insurers to do the same.

The Financial Conduct Authority (FCA) deserves credit for filing a group of insurers in the Supreme Court, where a 120-page ruling is largely on the side of plaintiffs.

Payouts can be as much as £ 4 billion and, for many businesses, are the difference between insolvency and survival.

It is impressive that the verdict was made so quickly. The FCA is now urging insurers to respond to the clarity provided by the High Court just before hundreds, if not thousands, of smaller companies needlessly collapse.

The ruling is welcomed by the Federation of Small Businesses and others, but it is a measure of the lack of confidence in insurers that they warn of little certainty about when or if the payouts will take place.

Businesses with standard business interruption insurance may not benefit. The response from insurers is worrying: several are studying the ruling and can appeal.

But there is an opportunity for big beasts like RSA, Zurich and Hiscox to lead by doing the right thing.

For insurers, it may not be of long-term value to see existing and future customers go to the wall. Listed insurers must balance the interests of shareholders with those of customers.

The stock market has made a decision about the way the wind blows, highlighting insurance stocks.

Insurers got into Covid-19 with strong capital and solvency reserves and have benefited from a decline in engine claims during lockdown.

The industry will suffer reputational damage if it slows payouts or, worse, decides to appeal to the Supreme Court to try to enforce the narrow wording of contracts.

Even the shortest delay could kill the business and jobs, in spite of the zeitgeist.

Archie’s bait

The long-suffering Marks & Spencer shareholders haven’t had much to cheer about lately. The market share in fashion, excluding lingerie, has fallen off a rock.

There have been musical chairs in the boardroom with too many golden goodbyes. And the group has suffered because it has too many stores in the wrong places.

Chairman Archie Norman faced flak when he splashed £ 750 million in a joint venture with Ocado, becoming the main UK supermarket supplier for the online champion. Timing was almost flawless, with Covid-19 and the giant leap forward for digital shopping.

Revenues at the online grocery store were up 52 percent in the 13 weeks to August 30, and that was before M & S’s range, including popular ready meals, was loaded into Ocado’s dumpy vans.

Buying food online doubled its share of lockdown to 14 percent of the market, and Ocado estimates it could reach 30 percent.

That should provide enormous support for M&S food. Previously, it could not make the economy work online because the ‘to be refilled’ shopping basket was too small.

Access to Ocado’s robotics means it can handle much larger shopping baskets, and higher-value products mean better margins than other grocers can achieve.

M&S issues are not over yet. It is much more difficult to follow the fashion zeitgeist. Nevertheless, in lockdown it has learned lessons about eradicating bureaucracy.

The biggest concern on the horizon is Christmas. Holiday ranges are in stock, but what to do if there is another lockdown?

Switch between playing

One of my sons is convinced that wearing the Chelsea shirt when watching big games on TV makes all the difference to the result.

This does not seem to be widespread superstition. But games played behind closed doors led to a 63 percent drop in online searches for a new kit in August.

Fans spent an estimated £ 23.9m on a Premier League kit last season and platform lovethesales.com is predicting a £ 15m drop in sales. That may seem big, but it wouldn’t pay Kevin de Bruyne’s pay at Manchester City.

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