Insurance Curator Pandemic Era BI Reopeners Resurface as Businesses Seek Settlements Over Supply‑chain and Closure Losses
Who: thousands of small and medium‑sized businesses, trade associations and law firms; what: an uptick in reopened and unresolved pandemic‑era business‑interruption (BI) claims and fresh settlement talks; when: in the run‑up to a March 2026 limitation deadline and after recent appellate rulings and a scheduled Supreme Court hearing in February 2026; where: primarily the United Kingdom and other advanced economies, with parallel activity in the United States, Canada and Australia; why: courtroom victories and clarifications have broadened the scope of cover for some BI wordings while lingering legal questions, looming statutes‑of‑limitations and supply‑chain shocks are prompting businesses to press insurers for recoveries. (fca.org.uk)
Summary
A wave of legacy pandemic claims that many insurers long regarded as closed or marginal is reappearing in regulatory letters, court dockets and settlement talks across first‑world markets. The flashpoint is the intersection of legal rulings that expanded policyholder access to cover—chiefly in the U.K.—and practical pressures on firms that never recovered fully from 2020 closures or that later suffered supply‑chain knock‑on losses. That mix has prompted renewed demands for payouts, new case filings in narrowly defined circumstances and a frantic race to preserve rights before time limits bar litigation. Regulators, law firms and market participants say the issue is now one of attrition and process as much as law: many eligible businesses lack the resources to litigate, and insurers are weighing reputational, capital and reinsurance implications as they reassess long‑dormant files. (fca.org.uk)
What is resurfacing — and why now
The immediate cause of the renewed activity is partly calendar‑driven. In England and Wales most contract‑based claims must be brought within six years; that limitation period means many pandemic BI claims tied to the March 2020 lockdown will begin to lapse in March 2026 unless claimants issue proceedings or reach standstill agreements with insurers. That deadline has focused attention and generated industry appeals for regulatory relief or voluntary moratoria so that unsettled claims can be resolved in an orderly way once outstanding legal questions are finally decided. (fca.org.uk)
Legal clarifications have also reopened the door for some insureds. The U.K. Financial Conduct Authority’s 2021 test case — taken to the Supreme Court — established that, for many policy wordings, losses caused by governmental restrictions in response to COVID‑19 could trigger non‑damage BI cover. The FCA’s litigation exercise identified some 370,000 policyholders whose wordings might respond. That ruling did not answer every question, however; successive Court of Appeal decisions in 2023–24 addressing “at the premises” disease clauses and denial‑of‑access language extended policyholder wins and left other doctrinal issues to be resolved in follow‑on cases. Those intermediate judgments have encouraged some policyholders and their lawyers to revive or relaunch claims. (fca.org.uk)
At the same time, an acute practical driver is the growth in contingent business‑interruption (CBI) and supply‑chain claims. Insurers and risk consultancies report that the cost and frequency of complex CBI claims have risen in recent years as inflation, labor shortages and cascading logistical delays lengthen repair and disruption periods. Those dynamics make even small interruptions more costly and have raised the materiality of previously marginal recoveries. (insurancebusinessmag.com)
U.K.: deadlines, furlough and renewed pressure on the FCA
The U.K. is the global epicenter of the second‑wave of reopeners. The FCA’s 2021 test case produced definitive rulings for the sample of policy wordings it advanced and identified an estimated 370,000 policyholders potentially affected; the FCA has since been collecting and publishing insurer claims data on progress. As of the agency’s last consolidated data publication, tens of thousands of accepted claims had produced interim or final payments, but a much larger pool of potentially eligible policyholders remained unresolved. (fca.org.uk)
Industry groups and claimant firms have pressed the regulator to act as March 2026 approaches. In late 2025 law firm Stewarts and hospitality trade bodies asked the FCA to require insurers to “stop the clock” and keep valid Covid BI claims alive for two more years — a move they said was needed so litigation outcomes on unresolved legal issues (including the treatment of government furlough payments) can be applied fairly to conditional or dormant claims. Stewarts warned that many small hospitality businesses lack resources to litigate before the limitation date and risk being time‑barred. The FCA declined the request, saying its current guidance and supervisory tools remain appropriate. (insurancebusinessmag.com)
A second, discrete legal trigger that has animated settlement talks is the treatment of government furlough or wage‑support payments in quantifying insured loss. Several cases that reached the Court of Appeal in 2024–25 held that emergency public wage subsidies (the U.K.’s Coronavirus Job Retention Scheme) could reduce an insured’s employment cost and thereby be credited back to insurers under typical “savings” clauses. Claimants obtained permission to appeal that issue. The appeals are listed for full hearing before the Supreme Court on Feb. 11–12, 2026; the court’s decision will determine whether many pending quantified claims must be reduced for the effect of furlough receipts. That prospect has increased urgency among claimants and provoked settlement overtures from insurers anxious to limit post‑judgment reopeners. (supremecourt.uk)
“We will be working with insurers to ensure that they now move quickly to pay claims that the judgment says should be paid,” the FCA said when the test case judgment issued in 2021; regulators and market participants continue to cite that pledge as a touchstone for fairness and timeliness. (fca.org.uk)
Court rulings, examples and settlements
The U.K. commercial courts’ post‑test‑case work has been consequential. In 2022–24 a sequence of High Court and Court of Appeal judgments applying the Supreme Court’s causation approach to “at the premises” disease clauses produced further policyholder successes. The Court of Appeal’s rulings in London International Exhibition Centre Plc and linked appeals clarified that, for certain wordings, the occurrence of COVID‑19 within a policy’s geographic scope could be causally linked to national public‑authority closures and thus satisfy the policy triggers. Those judgments encouraged additional claims and settlement talks. (casemine.com)
High‑profile commercial settlements have already occurred. Greggs, the U.K. bakery chain, reached a confidential multimillion‑pound settlement with Zurich in mid‑2023 after litigation had run in the High Court; Greggs later recorded receipt of a material credit relating to a Covid BI claim. Observers say such settlements are being used as templates in private negotiation rounds between commercial claimants and large market insurers. (theinsurer.com)
United States: litigation largely wound down but select reversals and niche claims persist
The U.S. experience has been different. A wave of early filings produced a patchwork of outcomes across state and federal courts; appellate panels and trial courts have more commonly favored insurers because the majority of U.S. policies require “direct physical loss or damage” to trigger first‑party BI. By recent counts, roughly 2,400 Covid BI coverage actions were filed in the U.S., and insurers prevailed in the vast majority of dispositive rulings. That litigation, while intense, has largely subsided. (jdsupra.com)
But the landscape is not monolithic. A notable jury award to Baylor College of Medicine that initially favored the policyholder was reversed on appeal in Texas in early 2025; the reversal underscored how state‑law differences and appellate review can swing outcomes and why certain pockets of litigation persist. Meanwhile, sophisticated corporate plaintiffs continue to evaluate narrow coverage theories — including where policies lack express virus exclusions or where all‑risk wordings and bespoke CBI endorsements exist. (mdjwlaw.com)
Supply‑chain and contingent BI: a second front for legacy disputes
Beyond closures and lockdowns, a growing category of pandemic‑related claims arises from contagion‑driven supply‑chain disruption and later shocks to supplier networks. Contingent business‑interruption coverage — which responds when a supplier or key logistics node sustains a covered physical loss — has become a focal point because courts and claims handlers must determine whether supplier interruptions amounted to the kind of insured physical damage required by many CBI clauses. Risk advisers and carriers report that inflation, labor shortages and extended repair times have inflated the economic impact when such coverage is triggered, which raises the stakes for both insureds and reinsurers. (insurancebusinessmag.com)
Industry and market response
Insurers and reinsurers have acted conservatively. Global reinsurers and large commercial carriers have taken pandemic‑era hits in prior years; some raised reserves, tightened wording and added explicit virus exclusions to new policies. Market participants say that legacy claims are now primarily a reserving, claims‑management and operational problem: carriers must locate dormant files, reassess exposures and decide whether to litigate, settle or accept small‑value payments to close accounts. Industry surveys show legacy claims are a top concern for carriers’ profitability and operational efficiency in 2025. (beinsure.com)
Insurer trade groups have emphasized the practical limits of retroactive rule‑making. The Association of British Insurers, among others, has historically warned that standard commercial policies were not priced to cover pandemic risk and that the market responded by excluding such risks for new business. The ABI has also urged adherence to policy language and actuarial discipline. Those positions frame insurers’ reluctance to agree to blanket reopeners. (icinsurance.co.uk)
Voices from claimants and lawyers
Law firms representing hospitality and leisure clients argue that legal developments consistently have moved toward policyholder access and that many businesses remain out of pocket after years without relief. Aaron le Marquer, head of policyholder disputes at Stewarts, told regulators and insurers in public letters that “five years of test case litigation has established that many policyholders whose claims were initially declined may in fact be entitled to compensation” and urged a limited extension of time for unresolved claims. Claimant counsel say the combined force of court rulings and the financial fragility of many SME firms justify a more pragmatic settlement posture by insurers. (insurancetimes.co.uk)
Insurers counter that many claims were, and remain, ineligible under clear policy exclusions or trigger language; they point to the large body of U.S. case law and to policy rewording in the market after 2020 as evidence that pandemic risk was deliberately managed away in subsequent renewals. Insurer spokespeople also emphasize the need to treat each claim on its facts and the difficulty of retroactively underwriting systemic pandemic risk. (Industry statements on record and in filings underline both prudential and legal constraints insurers face.) (jdsupra.com)
What this means for businesses, brokers and the market
For businesses: time is now a material part of the calculus. In England and Wales, the March 2026 limitation cliff means that policyholders with unresolved Covid BI matters should evaluate whether to issue proceedings, enter standstill agreements, or pursue settlement opens. Policyholders must also carefully review policy wording for disease clauses, denial‑of‑access language, CBI endorsements and “savings” clauses that may interact with government payments. Many claimant law firms and brokers are advising urgent internal audits of historic BI files. (fca.org.uk)
For brokers and advisers: the events of 2020–26 are a reminder that placement clarity, explicit limits and bespoke triggers matter. Risk advisers say clients should document loss causation contemporaneously, retain ledger and payroll records that show the financial effect of government support schemes, and seek legal advice early in jurisdictions where limitation periods loom. (marsh.com)
For insurers and reinsurers: unresolved cases are an operational and capital allocation issue. Settlements on favorable commercial terms — especially where liability is uncertain but reputational and client‑relationship costs are material — are likely to increase. At the same time, insurers will press reinsurance and facultative panels for contribution where placements involved pandemic exposures, a dynamic that could keep reinsurers in the loop for legacy recoveries. (beinsure.com)
Looking ahead: scenarios and stakes
Three likely scenarios emerge over the next 12–18 months. One, courts (including the U.K. Supreme Court on furlough payments) clarify a set of discrete remaining legal questions, allowing many pending claims to be quantified and closed through settlements. Two, regulators or market agreements produce limited timing accommodations that allow dormant claims to be reopened for a defined period; that would avert a surge of last‑minute litigation while protecting policyholder rights. Three, absent regulatory action, a tranche of claims will be time‑barred, prompting ad hoc litigation by better‑funded claimants and piecemeal settlements in large commercial programmes. Each outcome has different implications for industry loss development, insurer reputations and SME survival. (supremecourt.uk)
As Stewarts and hospitality trade bodies put it in their plea to the FCA: many small firms “remain out of pocket more than five years after the pandemic” and need time for courts to finish their work. On the other side, insurers maintain that the market has adapted its wording and pricing to reflect pandemic lessons and that systemic pandemic risk cannot be retroactively absorbed without implications for solvency and pricing. The legal and regulatory choices in early 2026 — including the Supreme Court’s decisions and the FCA’s supervisory stance — will determine whether a final chapter for pandemic BI legacy disputes closes by consent or by deadline. (insurancebusinessmag.com)
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Sources: Financial Conduct Authority; Court of Appeal and Supreme Court case listings; Stewarts law firm and hospitality trade bodies’ public correspondence and media coverage; Insurance Business, Insurance Times and The Caterer reporting; Hinshaw & Culbertson and other industry legal analyses on U.S. litigation trends; Allianz/AGCS claims analysis on BI trends; Marsh and Gallagher Bassett industry surveys on legacy claims and supply‑chain impacts; public company filings and commercial court judgments cited above. (fca.org.uk)