QIC Europe Ltd · DRN-6175801

The complaint A limited company, which I have referred to as L, complains about the handling of its business interruption insurance claim by QIC Europe Ltd. L made its claim as a result of the COVID-19 pandemic. What happened The following is intended only as a summary of events. L operates as an electrical installation business and held a commercial insurance policy underwritten by QIC. The policy covered a number of areas of risk, including business interruption. In 2020, L’s business was interrupted as a result of the COVID-19 pandemic. L claimed on the policy, under the following clause: “We shall indemnify You in respect of interruption of or interference with the Business during the Indemnity Period following: a) any: i. occurrence of a Notifiable Disease (as defined below) at or within a radius of 25 miles of the Premises…” It is not disputed that COVID-19 was a Notifiable Disease in terms of the policy, nor that there were relevant occurrences. And, ultimately, QIC accepted that there were three periods of indemnity that it was willing to meet the losses for. Although the policy term does not refer to government restrictions, as the occurrences led to these restrictions, which in turn led to the interruption, it is widely accepted that the introduction of more onerous restrictions would lead to a new indemnity period. L has previously complained about aspects of how QIC dealt with the claims – particularly that relating to the indemnity period commencing from 6 January 2021; the third national lockdown. This included complaining that QIC had stated that this indemnity period would not continue beyond 17 May 2021. L brought this complaint to the Financial Ombudsman Service and our Investigator recommended that, as restrictions did continue beyond this date, QIC should consider L’s losses past 17 May 2021 — either until the interruption ended, or when the maximum indemnity period ended, whichever is sooner. QIC agreed that it would “assess quantum as per the recommendations made by the investigator.” However, L has brought a further complaint about the handling of the claim. Another of our Investigators reviewed this complaint. Several of the complaint points have been resolved, so I will not set these out in detail. QIC has agreed to pay a sum of £26,037 plus interest as, effectively, an interim settlement on this claim. And L has agreed to provide the information QIC considers it reasonably needs to calculate the full value of the claim. The outstanding issue is whether QIC is obliged to apply the same methodology to this claim as was used in calculating the losses for the first two claims (relating to lockdowns one and two). Our Investigator concluded that QIC should be open about the calculation methodology, and share the calculation with L. But that it was not appropriate for L to say

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which methodology should be used. And that if L considered that the settlement ultimately offered was not fair or reasonable, it would need to complain about this at that point – providing evidence as to why the settlement was unfair or unreasonable. L did not agree with this. It said it was not trying to dictate how QIC settled the claim. But that the same methodology ought to be used for each claim on the basis of continuity and consistency. And that QIC had not provided any explanation of why it was apparently using a different methodology. L said that allowing an insurer to change the basis of loss calculation mid-claim, without compelling justification, is difficult to reconcile with the regulatory standards. As our Investigator was unable to resolve this complaint, it has been passed to me for a decision. What I’ve decided – and why I’ve considered all the available evidence and arguments to decide what’s fair and reasonable in the circumstances of this complaint. Having done so, I have reached the same conclusion as our Investigator. I’ve explained why below. Firstly though, I’ll just repeat that the above is only a summary. Additionally, as a number of the complaint points are no longer in dispute, I have not provided any significant detail on these. Both parties have also provided detailed submissions, but I have not commented on each of the points made – even in relation to the main outstanding issue. This is not intended as a discourtesy, but rather reflects the informal nature of the Financial Ombudsman. A number of issues have been dealt with previously, so do not strictly form a part of this complaint. As such, I make no formal finding on these within this decision. But, it does seem appropriate for me to make some general comments. Given the terms of the policy, and the wider legal position, each lockdown would likely commence a new claim period. The maximum period of indemnity under the policy would begin again for each of these. L’s policy has a 24 month maximum indemnity period, so a claim commencing 6 January 2021 would potentially include losses until January 2023. However, the key here is that this is the maximum possible period. This does not mean that a claim will continue for this length. A claim is only payable for the period where the proximate cause of loss continues to be the insured event. In circumstances such as this one, any loss caused by occurrences, prior to the end of the policy term, of COVID-19 within 25 miles of the premises – and any restriction brought in as a result of those – ought to be covered (up to the maximum indemnity period). L’s policy ran until 18 January 2021, so it is the losses proximately caused by occurrences of COVID-19 up to this date that are covered. Restrictions brought in by this date (or even those brought in as a result of occurrences up to this date) continued beyond this period and may have had an impact on L’s business. It is not for me to comment on when this impact ceased to be the proximate cause of L’s losses – that is something that will need to be assessed based on the evidence QIC has requested. But this may extend beyond 17 May 2021. Similarly, it is possible that the restrictions brought in prior to this (in 2020) continued to have some impact on L. But by the point of the third national lockdown, these previous restrictions

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were not the proximate cause of L’s losses. It is not possible for an indemnity period of this nature to continue after another has commenced. This would mean that a claimant was receiving double recovery – which is not appropriate. I don’t think any of this is disputed – and as I say, I am not making any findings on these points as such. But hopefully this provides some clarity if there was a need for it. In terms of the points subject to this complaint, QIC has agreed to pay the £26,037 (plus interest), that it offered in October 2024 to settle this claim, on a without prejudice basis. I consider that this can essentially be considered as an interim settlement of this third claim. This does not mean that any further sum is necessarily due – that will need to be determined based on a further assessment of the evidence required. L has also agreed to provide this evidence to QIC. So, hopefully matters can now progress. In terms of the outstanding issue, I do appreciate L’s arguments. I also agree that it would likely be helpful for a consistent approach to be applied across the three claims that have been made. However, I do not consider QIC is obliged to do this. Nor do I consider QIC is obliged to explain why it is using a different methodology now. It is open to QIC to choose how to calculate a claim, and it is not bound to follow one particular methodology even where that has been used previously. So, no explanation for departing from this previous methodology is required. QIC is obliged to carry out a settlement calculation that is fair and reasonable. But even L acknowledges that there are various different ways to calculate a claim and that each of these might be considered fair and reasonable. It is not the role of the Financial Ombudsman to dictate which of these fair and reasonable methods an insurer uses – even where one particular method has been previously used. QIC ought to provide an explanation of the calculation, and in doing so should demonstrate why this calculation is in line with the policy. In doing so it will, hopefully, demonstrate that it has used a methodology that produces a fair and reasonable settlement. Whilst I note L is unhappy that the burden is on L to demonstrate that this different methodology is unfair, this is the requirement for making any complaint – a complainant will need to explain that something has gone wrong and why. At this point, the calculation has not been carried out – so a complaint that this calculation has produced a settlement that is not fair or reasonable is premature. Putting things right If it has not already done so, QIC Europe Ltd should: • Set out a list of evidence for L to provide, • Once provided, use this evidence to calculate the settlement due in relation to the claim commencing 6 January 2021, and • Pay this to L, providing L with details of the calculation used to reach this settlement. My final decision My final decision is that I uphold this complaint. QIC Europe Ltd should put things right as set out above.

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Under the rules of the Financial Ombudsman Service, I’m required to ask L to accept or reject my decision before 17 April 2026. Sam Thomas Ombudsman

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