Insurance Companies and Banks Make Financial Claims Harder for Businesses

MSP David Stewart (pictured) fears many businesses in the Highlands and Islands will go under because the banks are making it harder to get business interruption loans and some insurers are refusing to pay out for business interruption insurance policies.

Mr Stewart, who represents the Highlands and Islands, has written to Finance Secretary, Kate Forbes, and has spoken to the Association of Business Insurers about the situation.

He is also contacting local chambers of commerce and the Federation of Small Businesses to gauge how it is affecting their members.

“What I am being told is that when people do get through to their banks about the loans, and that is proving difficult in itself, then the banks are asking for some sort of guarantee such as their house and that is causing some consternation about debt going forward,” said Mr Stewart.

“The business interruption loan is not the answer here.

“Charging the Bank of England rate would take a huge strain off businesses.

“The banks can afford to take this hit on their profits, our hard-working business owners cannot, and I am reiterating my request to the Cabinet Secretary to encourage Scottish banks to charge their commercial borrowers the Bank of England rate of 0.1% for 3 months initially then month to month as the government sees fit.”

He added:

“Failing to implement this could be the difference between survival and failure for thousands of businesses in the Highlands and Islands and across Scotland.

“When it comes to business interruption insurance it appears that not many policies will cover coronavirus.

“Only a very small number of businesses choose to buy any form of cover that includes business interruption due to notifiable or infectious disease and usually these list very specific diseases that are covered and not any notifiable diseases that emerge such as Covid-19.

“I understand the position from the insurers point of view, but it is a hard pill to swallow for many struggling businesses.

“I am concerned about both these issues as it will mean some companies will go to the wall because they cannot get access to funds soon enough and may not want to take on a great debt burden by putting up their own homes and other assets as guarantee.

“I am hoping that the Scottish Government, liaising with the UK Government, can step in to help businesses who are in this situation.

“There are individuals, families and a whole host of workers affected if businesses cannot survive.”

More information about insurance and ombudsman’s role:

https://www.abi.org.uk/products-and-issues/topics-and-issues/coronavirus-hub/
https://www.financial-ombudsman.org.uk/