COVID-19 and Claims Farming: A warning for clients

As policyholders will be aware, the last three years have seen a host of legal cases being pursued via the courts in an effort to clarify the coverage position on losses stemming from the pandemic. This period began with an almost complete rejection by insurers of any claim arising from COVID-19, although various legislation that followed over the course of 2021 and 2022 saw a shift in some of these positions, leading to certain businesses being able to claim specific losses against their insurance policy.

These legal cases are currently continuing, with a number still subject to appeal as we approach 2024. It is hoped that additional rulings will enable other clients to enjoy the benefit of coverage where previously it had been denied, although as time has gone on we have seen a balancing-out of the success rate between clients and insurers in these matters, with some cases being concluded in a positive way and others seeing a more stringent and less pragmatic position adopted in the face of policyholder arguments. Needless to say, with appeals still being heard any conclusion is impossible to give on these matters, although information on developments will be supplied to our clients as soon as it is available.

However it is important to note that we are seeing increasing numbers of approaches to policyholders from so-called ‘claims farmers’ in parallel to the developments in the legal cases associated with COVID-19. These companies seek to sign up multiple clients to their ‘service’ on the basis of promises about claims being settled or class actions being pursued. Needless to say, these companies are not acting out of charity and their intentions are to accrue fees or commission for clients who may not realise that they do not actually require the support of these claims companies in order to reach a settlement with insurers, should one be available.

As a customer of NDML, if a coverage dispute is resolved via legal action in such a way as to benefit you, we will handle your claim to its conclusion with no fee or commission charged. Nonetheless, claim farming companies will make grand promises suggesting that they will be able to achieve coverage where others can not, or a greater settlement than would ordinarily be offered. However these bold assertions are often not supported by the reality of a claim settlement, not least because these companies will be looking to charge a percentage fee on each successful case. Aside from those cases which do get paid, these companies will also have no greater power to force the courts to view coverage any more favorably than the high-level cases already being heard. As such we would advise any client who receives an approach from an external claims company to speak to us first, whereupon we will be able to advise directly on the coverage position of their particular policy and, where appropriate, handle any claims to settlement, without deductions or fees being applied.