Hospitality leaders and lawyers are calling on the Financial Conduct Authority to intervene in the case of Covid business interruption (BI) insurance claims.
An open letter, from legal disputes firm Stewarts, along with the UK’s leading hospitality trade associations, is calling on the authority to extend the window for BI claims, which are currently due to lapse in March 2026.
Stewarts, which has represented the successful policyholders in a series of test case litigation, believes that fewer than 50,000 claims have been accepted by insurers out of an estimated 370,000 policies that could qualify for BI compensation.
As a result, many thousands of hospitality businesses remain significantly out of pocket more than five years after the pandemic forced venues across the country to close for extended periods.
It said in the absence of FCA intervention, unresolved claims risk triggering significant volumes of litigation from those policyholders able to bear the cost and risk of issuing proceedings.
Litigation pressure
That avalanche of litigation is likely to add further strain to public resources, the company said, particularly at a time when the court system is under increasing pressure.
And for those that can’t afford to seek redress through the courts, Stewarts said many SME operators will be prevented from claiming compensation to which they were legally entitled after years of delay in resolving the underlying legal principles.
Aaron le Marquer, head of policyholder disputes at Stewarts, said: “Five years of test case litigation has established that many policyholders whose claims were initially declined may in fact be entitled to compensation.
“It is vital that adequate time is now allowed for the latest court decisions to be implemented. In February 2026, the Supreme Court will decide whether insurers were entitled to take the benefit of furlough payments received by policyholders, and we are asking insurers to commit to following the Supreme Court’s decision regardless of whether claims would otherwise have been time-barred.”
In England and Wales, most insurance claims are subject to a six-year limitation period. That means that a majority of unsettled Covid-19 BI claims, with values ranging from all the way from tens of thousands to hundreds of millions, will start to become time-barred from March 2026 onwards, unless legal proceedings are issued, or standstill agreements agreed with insurers.
Stewarts, together with UKHospitality and trade associations including the Music Venue Trust, BII and the BBPA, are requesting the FCA to issue new guidance to the insurance industry no later than 20 January 2026, to continue to pay valid claims for two further years following the looming March 2026 expiration date.
Clarity needed
The additional time will allow for much-needed clarity on several issues that continue to be disputed in ongoing Covid 19 BI policyholder cases, including the treatment of furlough payments, a topic that will be decided in the Bath Racecourse Supreme Court hearing in February.
Steven Swift, of insurance broker Sector Associates, who have been managing a large number of claims, added: “Insurance companies have been dragging their feet on the issue, and taking far too long to respond while failing to inform customers of the details required to ensure claims are processed successfully.
“The extra time the FCA could grant would allow us to hold the insurance companies to account, and ensure pub and bar operators rightfully receive the payouts they are entitled to.”