The last year has seen the health of the world’s populations and its economies take a battering.

With a renewed spread of infection and governments across the globe introducing ever tighter measures to protect their citizens, the coronavirus pandemic has shown few signs of releasing its grip on personal or commercial confidence.

In the UK this week, the Office for National Statistics released a brace of reports providing a snapshot of the current severity of the financial consequences of the Covid-19 outbreak.

The first – the latest instalment in a series of surveys of businesses from across the country operating in a wide range of economic sectors – revealed that almost one-third of companies involved in accommodation or food services had “no or low confidence” of surviving the next three months.

Findings were drawn from the two-week period during which Prime Minister Boris Johnson imposed a new national lockdown and included another indication of how British professional services have been forced to rethink how they do what they do.

One-in-six businesses, the ONS disclosed, now intend to have a greater reliance on employees working from home on a permanent basis.

The effect of all that was clear in the second set of ONS’ figures, which showed that UK Gross Domestic Product (GDP) fell by 2.6 per cent in November, even before an escalation in anti-Covid restrictions.

That same month also saw the insurance industry choosing to challenge a High Court ruling following a case brought by the Financial Conduct Authority on behalf of an estimated 370,000 policyholders.

The case related to complaints from companies who had, they maintained, been unfairly denied when trying to claim on their business interruption insurance policies after being affected by the pandemic.

The September judgement was “substantially” in favour of the FCA and policyholders but also put two insurers – Zurich and Ecclesiastical – in the clear.

Six further insurers (Arch, Argenta, Hiscox, MS Amlin, RSA and QBE) were given leave to appeal the decision and together with the FCA – which wanted to contest those parts of the High Court ruling which had gone against it – aired their cases in a four-day Supreme Court hearing.

The Supreme Court has now also “substantially allowed’ backed the FCA argument.

As I’ve been telling Naomi Ackerman of the London Evening Standard it’s a judgement which is, I believe, a landmark for the entire insurance industry, not just the companies concerned.

Normally, of course, policies generally only come in for intense scrutiny as a result of a severe economic downturn. The coronavirus pandemic has created, however, a set of unprecedented circumstances for us all.

What, in essence, the latest ruling means is that insurers will now have to demonstrate why they don’t pay out on a case-by-case basis.

There is, therefore, still a lot of work to do, despite an assumption that the judgement might lead to instant pay-outs for all those businesses affected.

All the attention from the court cases has put insurance companies well and truly in the spotlight.

Even so, I am of the opinion that others too will have to up their game. Brokers too, for instance, are going to be asked to back up the policy recommendations which they make in the future with even more vigour both by businesesses and private clients.

We should, though, avoid the temptation to view all the effort now required as something of a negative. It is, I feel, actually something of an opportunity to return to the essentials of insurance.

There’s been a lot of focus on the glossier elements of the industry, such as the move towards digitalisation, but at the heart of what we all do is securing and maintaining the trust of those who take out insurance policies with programme efficiency, product efficacy and disclosure of what cover entails.

We should be prepared to be asked more searching questions in the months and years to come.

That should be a chance to improve and to use the awful last 10 months to better serve those businesses and individuals who rely on us.

Daniel Lloyd John0002 - Pandemics And Policies: A Supreme Challenge For Insurance


Written by Daniel Lloyd-John, Chief Executive, Broadway Insurance Brokers