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Business Interruption claims – ST Ombud outlines its position

In the wake of what appears to be a substantial number of complaints regarding loss of income due to business interruption as a result of Covid-19, the Office of the Short-Term Ombud has published a media release to outline its position on such matters.

“Where complainants approach OSTI before approaching their insurers to resolve their complaints, OSTI refers these complaints to the insurers and gives the insurers the opportunity to resolve these complaints directly with their complainants. If a complaint is not resolved, the complaint is then allocated to an assistant ombudsman in the office for further investigation,” says Teixeira-Mckinon.

“If a complaint’s monetary value exceeds the OSTI’s monetary limits, then the complainant can agree to abandon a portion of his/her complaint to bring the complaint within OSTI’s monetary limits,” explained Teixeira-McKinon.

One of the types of cover that the office does not deal with is the cover for loss of profits. “The decision not to deal with the cover for loss of profits and the other listed covers was taken because these covers are complex in nature and require specific expertise which the office does not possess and they are therefore better suited to be determined by a court of law or through another dispute resolution forum,” she said.

Teixiera-McKinon went on to say that it is for OSTI to determine whether or not a business interruption complaint is complex and requires specific expertise which the office does not possess and therefore whether the complaint is one that the office can or cannot deal with.

“As the office has always done, it will continue to deal with each complaint on its own merits and to make decisions based on the law and, where appropriate, equity,’ she concluded.

In response to our enquiry, the Ombud indicated that in cases where the loss of income calculation is not complex, and does not require specialised accounting expertise, the OSTI may also decide to deal with that aspect of the complaint.

OSTI Terms of Reference

The Ombudsman resolves disputes using the criteria of law, equity and fairness.

The Terms of Reference contains some very important considerations for complainants, including the following:

Should a complaint be lodged with the Ombudsman’s office and thereafter the Complainant refers such dispute to an attorney for the further conduct of the dispute and/or direct correspondence with the Insurer, or for litigation, then the Ombudsman will immediately withdraw from the matter.
A Complainant may at any time terminate the Ombudsman’s adjudication of the complaint and resort to litigation.
With the written consent of an Insurer and at his discretion the Ombudsman may investigate a complaint which exceeds his jurisdiction and make a recommendation or a Ruling in relation thereto.
Complaints should be pursued reasonably by the complainant and not in a frivolous, vexatious, offensive, threatening or abusive manner

Rulings by the OSTI

The OSTI resolves disputes using the criteria of law, equity and fairness, after which it makes a recommendation. Should the insurer disagree, the OSTI has the power to make a ruling.

“Ruling” means, with respect to a complaint, a written directive issued by the Ombudsman which is binding on the Insurer and which is based either in law or equity;

When all the material facts are agreed or the facts have been established to the Ombudsman’s satisfaction on a balance of probabilities, the Ombudsman may make a Ruling.
Rulings shall be based on the law and equity.
Where a material fact cannot be established or cannot be resolved on a clear balance of probabilities the Ombudsman may not make a Ruling. In such cases the Ombudsman shall advise the Complainant that the complaint is not one on which he or she can assist and that alternative recourse may be sought through the courts.
Any Ruling made by the Ombudsman shall be binding on the Insurer concerned save where an appeal against such Ruling is noted as is provided for in Clause 8 of the Terms of Reference.

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