Thousands of hospitality businesses in England and Wales may miss out on Covid-related insurance payouts unless the Financial Conduct Authority (FCA) steps in to extend a fast-approaching claims deadline, industry leaders have warned.
In an open letter to the regulator, disputes firm Stewarts, alongside major trade bodies representing more than 155,000 businesses, urged the FCA to require insurers to extend the business interruption (BI) claims deadline by two years. Without intervention, many firms fear they could be barred from compensation to which they may be legally entitled.
Most Covid BI policies are set to expire in March 2026 under standard six-year limitation rules. These policies were designed to help businesses forced to close during the pandemic, allowing firms to borrow up to £5 million through participating banks.
Stewarts estimates that fewer than 50,000 claims have been accepted from an estimated 370,000 policies that could qualify. The firm says the approaching deadline threatens to leave the majority of unresolved claims time-barred, potentially leaving thousands of hospitality businesses significantly out of pocket.
The letter warns that without an extension, unresolved claims could trigger a surge in litigation from policyholders able to pursue legal action. Trade bodies said such a wave of disputes would place additional strain on the courts and public resources.
Signatories to the letter include UKHospitality, representing 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 socialising sector. Together, they argue that many small and medium-sized businesses lack the resources to pursue individual legal claims and could be unfairly excluded from compensation.
The groups said extending the claims window would “avoid unjust avoidance of policy coverage” for businesses that have acted responsibly and in good faith throughout the process.
Aaron le Marquer, head of policyholder disputes at Stewarts, said additional time is needed to allow recent court rulings to be properly implemented. He highlighted a Supreme Court judgment expected in February 2026, which will clarify whether insurers were entitled to deduct furlough payments from claims.
“It is vital that adequate time is now allowed for the latest court decisions to be implemented,” le Marquer said. “We are asking insurers to commit to following the Supreme Court’s decision regardless of whether claims would otherwise have been time-barred.”
Stewarts and the trade bodies are urging the FCA to issue guidance by January 20, 2026, requiring insurers to continue paying valid claims for two more years. They say this would provide clarity on unresolved issues, including the treatment of furlough payments, one of the most contested areas in Covid BI cases.
The hospitality sector has faced years of pressure, from pandemic closures to rising costs and higher employment expenses. Industry leaders warned that failing to resolve outstanding claims risks undoing previous government support, including a £2 billion Treasury package and wider grants and business rate relief, pushing otherwise viable businesses toward financial distress.
