Industry leaders have warned that thousands of hospitality businesses risk losing their claim to Covid-related insurance compensation unless the Financial Conduct Authority (FCA) intervenes to extend a fast-approaching claims deadline.
In an open letter to the regulator, dispute resolution firm Stewarts joined major hospitality organizations representing more than 155,000 businesses in calling on the FCA to require insurers to extend the business interruption (BI) claims period by two years. Without intervention, many companies fear they will be excluded from compensation to which they may be legally entitled.
Most Covid BI policies in England and Wales will expire in March next year under the usual six-year limitation rules. These guidelines were intended to support businesses forced to close during the pandemic and allow them to borrow up to £5 million through participating banks.
However, Stewarts estimates insurers have accepted fewer than 50,000 claims out of an estimated 370,000 potentially eligible policies. The company argues that the looming deadline will cause most unresolved claims to expire and thousands of hospitality businesses will suffer significant financial losses.
The letter warns that if the claims window is not extended, unresolved cases could lead to an increase in litigation from policyholders who may bear the costs and risks of legal action. This would place an unnecessary burden on courts and public resources, the groups say.
Signatories include UKHospitality, which represents more than 130,000 venues, the British Beer & Pub Association, the Music Venue Trust, the Association for Indoor Play and Gamechangers, which represents the competitive socializing sector. Together they argue that many small and medium-sized businesses lack the resources to assert individual legal claims and that they would be unfairly excluded from compensation.
The groups say an extension would prevent “unwarranted circumvention of insurance coverage” for companies that acted responsibly and in good faith throughout the claims process.
Aaron le Marquer, head of policyholder disputes at Stewarts, said more time was essential for recent court rulings to be properly implemented. He referred to an upcoming Supreme Court ruling, due in February 2026, that will decide whether insurers are entitled to deduct holiday payments from policyholders’ entitlements.
“It is important that there is now sufficient time for the latest court decisions to be implemented,” he said. “We call on insurers to commit to complying with the Supreme Court’s decision, regardless of whether claims would otherwise be time-barred.”
Stewarts and industry bodies are calling on the FCA to issue guidance no later than January 20 next year that will require insurers to continue paying legitimate claims for a further two years beyond the current March deadline. They argue the extension would provide clarity on key unresolved issues, including the treatment of furlough payments, which remains one of the most contentious areas in Covid BI cases.
The hospitality sector has been under pressure for years, first from forced closures during the pandemic and then from continued cost inflation. More recently, businesses have suffered a sharp increase in employment costs following measures introduced in Rachel Reeves’ first budget last year.
During the pandemic, the Treasury has poured billions of pounds into supporting pubs, bars and restaurants, including a £2 billion package announced in the 2021 Budget, as well as wider grants and business rates relief. Industry leaders are now warning that a failure to resolve outstanding insurance claims risks much of this support being wiped out, which could plunge otherwise viable businesses into financial distress.
