An open letter to the Association of British Insurers, reportedly signed by nearly 700 business owners, says the organisation and its members have displayed an “abrogation of responsibility” in their response to business interruption (BI) claims.

Addressed to ABI director general Huw Evans, the letter calls the association and its members “callous and wrong” for their approach to insureds who made the “seemingly prudent decision” to pay higher premiums for coverage that extends to pandemics.

Both the ABI and its member insurers have been steadfast in their assertion that only a small number of BI policies have coverage for pandemics, and that in cases where “notifiable diseases” are covered in their wording, this is generally confined to a list of named illnesses.

The ABI has said in the past that each claim will be examined on its merits by the insurer according to “all the policy wording”, but the letter’s signatories questioned why the same flexible approach being demonstrated elsewhere in the insurance market wasn’t being afforded to SME’s.

They pointed to a former statement from the Financial Conduct Authority (FCA) in which the regulator told insurers to treat customers fairly and consider payments on claims they might usually reject.

“There is no suggestion that insurers should make payouts to businesses with only basic BI cover,” the letter said.

“However, those of us that paid for extended BI policies are justified in expecting providers to honour them.

“It is hard to understand why this would not be affordable for your industry: BI payments are capped, and by your own admission they will be few in number.”

The FCA recently said it will seek a high-court ruling on cases where BI has been denied to display a judgment on where insurers should be expected to pay out.

Hiscox Action Group (HAG) member and letter signatory Daniel C. Duckett recently told NS Insurance the HAG had been contacted by the FCA, and has now said the regulator is looking to bring the case to court as early as July.