I clearly and fully understand what is stressing about the situation. The OP made a lot of business with Amex and thought the related insurance company would be as reliable as Amex is.

And then the insurance started what insurances *ALWAYS* do:
Try to reject claims and reduce paid-out amounts. And additionally in a very, very unprofessional way. If I would be the OP I would sue the insurance for breaking the confidentiality of the insurance contract.

The reason for that is very simple: They didnīt ask for any business references only. Indeed they approached a business partner in another country about the seriousness of the owner.

In that case my alarm bells would ring like those of the partner in Israel.

If I would be involved in this transaction I would do the following:
1.) Take the insurance to court in order to apologize and pay compensation.

2.) Afterwards send this judgement to my - then former - business partner.

3.) Cancel all unnecessary insurances at any insurance companies. You now know what happens if a tiny claim is made: Lots of fuss and investigating even in case of true statements/claims.

And the wording of the linked document is really ugly. The "subject" is not a fine denomination for a customer.

I also would try to escalate it to UKs Amex management in order to change the insurance partner respectively set up new standards of collaboration.

So in that case the fault is not at an Amex department but made by the insurance.

This ugly event should have one positive side effect: Use it as wake-up call about insurances and their business model. Yes, I know there are also reliable insurances out there but not the majority of them.