Current status of COVID business-interruption (BI) claims in the UK part two — and how forensic accountants can help
Click on the link for the previous article.
The FCA’s 2021 test case set the legal foundation for many COVID BI claims, insurers have paid and settled large numbers but significant contested claims and appeals remain (including issues now before the Supreme Court). Many pandemic-era BI claims are approaching limitation deadlines (a practical urgency). Forensic accountants remain central to proving, quantifying and prosecuting BI losses — and their role keeps growing as litigation and complex adjustments continue. Financial Ombudsman
4) Practical services forensic accountants should offer (checklist)
- Fast-start evidence preservation: obtain ledgers, EPOS exports, staff rotas, booking/attendance logs, supplier correspondence, online reviews/booking cancellations.
- Detailed quantum report: baseline, counterfactual, direct and indirect losses, period of indemnity analysis, adjustments (grants, furlough, VAT), worked schedules and reconciliations.
- Sensitivity analysis: show best / central / worst estimates and how small changes in assumptions affect the outcome.
- Loss reconciliation: tie claimed losses to audited accounts or management accounts with clear reconciling items.
- Expert witness package: a witness statement, CV, methodology annex and demonstrative schedules ready for litigation.
- Project management: liaison with solicitors, insurers, the FOS and expert counsel; maintain chain of custody for documents.
5) Tips for policyholders & advisers (actionable)
- Act now on limitation — don’t wait: gather records and instruct advisers early. Several practitioners have warned of fast-approaching limitation windows. stewartslaw.com
- Document contemporaneous decisions: notes, emails, logs of cancellations and customer communications strengthen causation evidence.
- Be precise about policy wording: small differences in disease/geographic/denial-of-access wording matter; forensic accountants should read the wording alongside legal counsel. Supreme Court
- Model multiple scenarios if parts of the claim are disputed; courts and tribunals often look for reasonableness and transparency.
- Use experts early: early input from forensic accountants helps shape negotiation strategy and, when necessary, prepares the claim for mediation or court.
6) Practical example: contentious issue — furlough deductions
One live and significant issue is whether insurers can deduct furlough wages / employer support from BI payments. That point is the subject of high-value appeals and could change recoverable quantum materially if the Supreme Court rules in one way or another. Forensic accountants must therefore model both possibilities and be ready to show how the deduction is being applied. 3VB
7) Conclusion — what to do next
COVID BI is not “closed”: legal developments, appeals and factual disputes continue to reshape recoveries. Forensic accountants are essential partners — from gathering and preserving evidence to building transparent, court-ready quantum reports and advising on offsets and negotiation strategy. If you advise policyholders or are a claimant, prioritise evidence preservation and early forensic involvement; if you are a forensic accountant, ensure your reports anticipate the evolving legal issues (aggregation, furlough, grants) and are defensible in court. Financial Ombudsman
Key sources and further reading
- UK Supreme Court / FCA test case materials. Supreme Court
- Recent appellate developments (e.g., Bath Racecourse permission to appeal re: furlough). 3VB
- High-profile case reporting, e.g., ExCeL Centre appeal. Reuters
- Practical advisory and claimant-warning notes (law firms / insurers) on time limits for COVID BI claims. stewartslaw.com
- Financial Ombudsman Service guidance for COVID-related insurance complaints. Financial Ombudsman
