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Business Interruption Insurance

Thousands of small businesses across Scotland are trying to claim on their insurance policies because of the interruption to their trading caused by the lockdown.

Despite the UK Government announcement on 17th March, the insurance companies are not stepping in to help, and will not do so unless Government intervenes. Businesses urgently need a package in place to offset the fact that vast numbers of insurance providers will simply not pay out.

RSA underwrites many self-catering businesses throughout the UK. ASSC is working with the Professional Association of Self-Caterers and others, including our Partner for Business, Bruce Stevenson to address their refusal to pay out on policies which DO cover coronavirus. Thus far, RSA has responded negatively to all intimated claims. PASC has set up a facebook group (https://www.facebook.com/groups/209568546997457/) and intends to take out a joint action against RSA.

ASSC first wrote to the Treasury on 18th March on this subject (https://www.assc.co.uk/covid-19-the-uninsurable-risk/) and still believe that we need an urgent agreement between UK Government and the Association of British Insurers.

At First Minister’s Question Time on 6th May, the following question was asked regarding insurance company obligations:

“Several insurers have been accused of wriggling out of their obligations, which puts at risk the future of many businesses. Will the First Minister meet insurance companies and spell out to them that leadership and social responsibility are crucial during the pandemic, so that, when the lockdown ends, we can still have a functioning economy?” (David Stewart (Highlands and Islands) (Lab).

We have had the assurance from the Cabinet Secretary for Rural Affairs and Tourism that he will raise this with the UK Government and try to secure an intervention. This would be a huge help to a struggling sector, who has not only been hit with closure, but also with having to refund tens of thousand of pounds in advance bookings, and no prospect of future bookings.

For those insurance providers who have accepted liability for accommodation providers eg NFU, they are deducting the £10k or £25K Small Business Grant from any loss of income / Business Interruption payout due. The Grant should be seen as support for ongoing business costs (including standing costs such as insurance and utilities). The Business Interruption cover should reflect loss of income during the lockdown, when Government enforced closure of non-essential businesses on 23rd March, including self-catering accommodation providers. It seems absurd that this should be deemed acceptable by insurance providers.

We have requested that this is highlighted to the Financial Conduct Authority and UK Government and intervention is sought.

Whilst we appreciate that this will be a marathon rather than a sprint, is something that, as an association, the ASSC is committed to addressing.

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