Bosses at Sheffield hospitality firm in despair over delays to £25,000 Covid claim
Bosses at a Sheffield hospitality business have been left in despair after ‘delays and odd questions’ from insurers over a £25,000 Covid claim.
Kevin Johnstone and sister Melanie Irwin, of Johnstone Leisure in Ecclesfield, ‘spent ages’ filling in forms to claim for ‘business interruption’.
They hoped to receive up to £25,000.
But the loss adjusters kept coming back with more questions, they said.
The firm, which ran a function suite on Yew Lane, closed on March 20 last year and has not reopened. Ten jobs were lost.
Melanie said: “I got the sense they were trying to avoid having to pay out by constantly coming back with questions so we would eventually give up.
“We are not trying to be greedy. We’ve paid in over all these years and not claimed for years and they do all this to stop us claiming what we are entitled to.
“Insurance is for times like this, when things happen out of your control and in your time of need, but they’ve failed us.”
Johnstone Leisure is insured by Ergo, based in Germany. Ergo is represented in the UK by loss adjusters MPL Claims Management.
Melanie said at first they were told they could only claim from March to June. Then they had to produce three years of accounts, then wages records, then energy bills and finally bank statements.
Kevin Johnstone said they hoped to reopen as a restaurant and banqueting venue called The Regency Club in June.
The pair contacted claims adviser Jeff Knibb after seeing an article in The Star about insurers trying to wriggle out of payments.
Mr Knibb, of My Litigation Friend in Doncaster, said he was confident of winning a payout for them because the policy wording was is in line with a Supreme Court judgement.
It meant Johnstone Leisure was covered and there was ‘nothing the insurer could do’, he added.
But now the loss adjuster was trying to reduce the amount of the claim.
He added: “The loss adjuster has been operating with considerable delays and with minimal information to the claimant and odd questions that seem to have been plucked out of the air. Why do they need individual bank statements?
“They could have got everything they need in one or two emails. It all seems to be aimed at reducing the amount.
“I’m asking for £25,000 and I’m confident because it is a simple calculation based on loss of turnover.
“Johnstone Leisure could have used this money a year ago.”
Up to a third of firms are covered for business interruption due to the pandemic, but most were put off by multiple hurdles, including insurers quoting wording that ‘was not even there’, he added.
Last September, the High Court ruled the majority of companies with business interruption insurance were entitled to make a claim.
Insurers appealed, but this was rejected by the Supreme Court in January, paving the way for payouts. At the time, the Association of British Insurers said they expected members to pay ‘up to’ £2 billion.
Many firms hoped it would be a lifeline at a time of national crisis.
But firms are still battling for payouts a year after the first lockdown. And due to the complexities it is estimated up to 90 per cent who go it alone give up.
Ian Blackford, managing director of MPL Claims Management, insisted ERGO was not seeking to avoid paying the claim and they had a right to ask for financial information to establish losses.
And once bank statements for the business had been provided they would ‘adjust’ the claim ‘as quickly as possible’.
The case was initially lodged on February 11 following the Supreme Court decision, he added.
He said: “ERGO has carefully considered the judgment and in principle cover is available to Johnstones under the policy.
“However, it is still necessary for Johnstones to show that the claim falls within the terms of the policy including evidencing the loss that is being claimed.
“Johnstones has so far provided very limited financial information in support of the loss and as a result we’re not in a position to progress the claim.
“This has been clearly explained to Mr Johnstone, who has been told that the claim is in a pending state awaiting requested information.
“We understand that micro accounts for the business have been filed at Companies House (which do not contain profit and loss information) and so we requested monthly profit and loss data for the business that we assume was used to support the micro accounts.
“We have been told that they did not keep this information and so we suggested that they provide copies of their bank statements instead so that we could try to extract e.g. takings for the business.
“Despite a number of requests, the bank statements have not been provided. We have not requested personal bank account statements but the accounts for the business.
“ERGO is not seeking to avoid paying this or any other COVID related claim. However, insurers are entitled to review enough financial information to establish the loss that the policyholder is claiming.
“This is standard across the insurance market and ERGO has been adjusting and paying claims for policyholders that have provided sufficient supporting evidence.
“If Mr Johnstone would like to progress the insurance claim, we would kindly request that he provide the requested information. Once we have this information, we will adjust his claim as quickly as possible (as we have been doing with other policyholders).
“Whether this is in time for him to open a new restaurant in May or June entirely depends on the information that is provided.”
* My Litigation Friend charges 15-25 per cent of a settlement on a ‘no win, no fee basis’.