QBE may appeal part of UK court ruling on COVID-19 claims
QBE Insurance Group has estimated an impact of around $70 million as a result of the UK High Court judgment in the Financial Conduct Authority’s (FCA) business interruption (BI) test case on COVID-19 claims. The insurer said that it is considering its options to appeal part of the judgment.
QBE was one of the eight insurers that participated in the FCA test case aimed at resolving the lack of clarity and certainty in relation to COVID-19 business interruption claims.
The test case included some policy wordings of QBE’s UK operations, in the context of whether those policy wordings respond to COVID-19 and related government mandated nationwide lockdowns.
The insurer said that the court ruled in favour of QBE with respect to two out of three of QBE’s notifiable disease policy wordings examined, and in favour of insurers generally with respect to denial of access policy wordings.
However, the court ruled in favour of insureds with respect to one of QBE’s notifiable disease policy wordings. QBE said that it is "considering its options to appeal that decision".
Based on the notified claims affected by the FCA test case, QBE’s estimate of its UK business interruption claims exposure is around $170 million before allowing for recoveries under the group’s catastrophe reinsurance protections.
QBE believes that catastrophe reinsurance will limit the net cost of business interruption claims in our UK insurance business to $70 million.
However, it said that given the possibility of appeals and further legal action the estimated gross cost to QBE could increase or decrease, but the net cost is not expected to vary.
The insurer also noted that the FCA test case decision is "highly complex and will take time for the industry to fully consider and for claims to be resolved".
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