Service Decision Reference 2023-0244
| Case Outcome | Rejected |
| Year | 2023 |
| Date | 14 November 2023 |
| Reference | 2023-0244 |
| Subject Matter | Service |
| Finantial Sector | Insurance |
| Conducts Complained Of | Claim handling delays or issues,Poor wording/ambiguity of policy, Rejection of claim |
Decision Ref:
2023-0244
Sector:
Insurance
Product / Service:
Service
Conduct(s) complained of:
Claim handling delays or issues
Poor wording/ambiguity of policy
Rejection of claim
Outcome:
Rejected
LEGALLY BINDING DECISION OF THE FINANCIAL SERVICES AND PENSIONS OMBUDSMAN
The Complainant, a limited company trading as an intern placement and career training
company, hereinafter ‘the Complainant Company’, held an Insurance Policy with the
Provider. The complaint concerns the Provider’s decision to decline the Complainant
Company’s business interruption claim. The policy period in which this complaint falls, is
from 1 August 2019 to 31 July 2020.
The Complainant Company’s Case
The Complainant Company, by way of its Representative, first notified the Provider on 18
May 2020 of a claim for business interruption losses sustained due to measures imposed
by the Government to help curb the spread of coronavirus (COVID-19). The Complainant
Company says in this regard that it closed its business premises on 27 March 2020.
The Complainant Company, in making its claim, relied upon the following provision, ‘the
notifiable human clause’, in the ‘Office package: Property – Business interruption’ section
of the Policy Wording:
“We will insure you for your financial losses and any other items specified in the
schedule resulting solely and directly from an interruption to your business caused
by the following: …
- 2 -
/Cont’d…
Public authority 5. your inability to use the office due to restrictions
imposed by a public authority during the period of
insurance following …
b. an occurrence of a notifiable human disease”.
The Complainant Company notes that the Provider wrote to its Representative on 11 June
2020 to advise that it was declining the claim because there had been no occurrence of
COVID-19 at the Complainant Company’s premises which resulted in the public authority
imposing restrictions on the use of the premises and independently of this, the financial
losses suffered did not result solely and directly from an interruption to its business caused
by an insured peril, such that the concurrent restrictions, safety measures and economic
slowdown resulted in there being more than one cause of the losses suffered.
The Complainant Company says that its Representative emailed the Provider on 6 July
2020 and on 15 July 2020 to express its dissatisfaction with the Provider’s decision, and
that the Provider responded on 20 August 2020 to advise that its position remained as
stated in its correspondence of 11 June 2020.
The Complainant Company notes that following a subsequent review the Provider carried
out after the UK Supreme Court decision in The Financial Conduct Authority v. Arch
Representative on 8 March 2021 to advise that it was standing over its decision to decline
the claim because it had concluded that the Complainant Company’s business had not
been subject to mandatory closure as a result of the relevant Government restrictions and
that the Complainant Company was not reliant on its premises in order to operate the
business.
The Complainant Company says that its Representative emailed the Provider on 11 March
2021 to submit, among other things, as follows:
“Whilst [Provider] have referred to the timeline of Government announcements and
subsequent statutory instruments, [Provider] have not provided the context for
these measures, i.e., the fear of being overwhelmed by the occurrence of disease
and the fact that the authorities were compelled to make decisions absent of
relevant information and sophisticated testing data. By means of an example, the
preamble to [Statutory Instrument No 121/2020 – Health Act 1947 (Section 31A –
Temporary Restrictions) (Covid-19) Regulations 2020] clarifies that the orders were
being made: “having regard to the immediate, exceptional and manifest risk posed
to human life and public health by the spread of Covid-19...”
This is the context within which [Complainant Company] took subjective decisions,
in good faith, as to the application of the myriad announcements of the various
restrictions upon their business. We say that S.I. 121 cannot be applied to suggest
that [Complainant Company] are an ‘essential’ service - if [Provider] contend
otherwise then it behoves [Provider] to state what section of S.I. 121 Schedule 2
[Provider] have relied upon in making [its] determination.
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