Relief for Private Dental Practices? - Update following the verdict of the FCA’s business interruption insurance test case

We recently wrote about the implication of the Government’s lockdown orders forcing dental practices to shut their doors, with all routine care being suspended nationwide. Our previous article highlighted that new evidence suggested that more than three-quarters of dentist practices will receive no support from the Government’s COVID-19 support schemes. With many dental practices facing an insurer refusing to pay out for business interruptions relating to the global pandemic coupled with being unable to rely on the Government, many were left wondering where to turn next. 

The Financial Conduct Authority (FCA) had previously confirmed that the majority of business interruption policies don't make provisions for disruptions caused by a pandemic, meaning insurers won't pay out to most businesses affected by COVID-19. However, at the time of making the statement, the Financial Conduct Authority were in the process of seeking a Court declaration to clarify which claims should be honoured.

Positive news recently surfaced on 15th September 2020, as the High Court ruled that the majority of businesses who held business interruption insurance and were forced to close due to the COVID-19 pandemic are entitled to be compensated by their insurers and that, subject to the limits of the policy, this compensation should return them to the position they would have been in had the pandemic never happened.

Whilst this is certainly welcome news for all dental practices, the ruling reconfirmed that pay-outs remain subject to the limits of the policy. Like all insurance products, the small print of business interruption policies carries a list of exclusions, with infectious diseases typically being one of them. The FCA’s test case has now provided an element of clarity and certainty for many policy holders, however, whether an insurer is truly capable of denying or limiting a claim will still depend on the specific wording of the business interruption insurance policy.

During the midst of the Government’s lockdown orders, we highlighted the alarming statistic that 70% of practices say that they can only maintain financial viability for a maximum of three months. We have seen a gradual easing of lockdown measures and practices have been able to treat patients again (albeit with many restrictions affecting portability still in place). With the obvious need for urgency, practices will find some comfort in that fact that insurers have been encouraged by the FCA to, irrespective of any appeals process, consider the steps they must now take to progress claims.

To assist with the cash flow difficulties which have arisen, at Charles Russell Speechlys we are now demanding that our clients’ insurance providers make an immediate interim payment whilst full losses are calculated. Whether you’re looking to bring a claim against your insurer or simply seeking clarity as to your position under your insurance policy, our specialist lawyers are able to assist by combining sector-specific knowledge with insurance law and regulatory expertise.

For further information on how we can support you and your business, please contact Helen Wong, Tertius Alberts or your regular contact at Charles Russell Speechlys.