May 2020 – THE FCA INTENDS TO SEEK LEGAL CLARITY ON BUSINESS INTERRUPTION INSURANCE TO ASSIST BUSINESSES WHICH ARE FACING UNCERTAINTY ABOUT THEIR CLAIMS.
IT AIMS TO SEEK A COURT DECLARATION ON AN “AGREED AND URGENT BASIS” TO GET AN INDEPENDENT VIEW ON DISPUTED BI INSURANCE POLICIES.
Christopher Woolard, Interim Chief Executive of the FCA, said:
‘We have been clear that we believe in the majority of cases, business interruption insurance was not purchased to, and is unlikely to, cover the current emergency. However, there remain a number of policies where it is clear that the firm has an obligation to pay out on a policy. For these policies, it is important that claims are assessed and settled quickly. There are also some other policies where firms may consider there is no doubt about wording and decline to pay a claim, but customers may still consider there is genuine uncertainty about whether their policy provides cover.
‘Our intended court action is designed to resolve a selected number of key issues causing uncertainty as promptly as possible and to provide greater clarity for all parties, both insured and insurers. It is clear that decisive action is appropriate given the severity of the potential consequences for customers”.
The cases the regulator will put before the court “will be carefully chosen as a representative sample” of the most frequently used policy wordings that are giving rise to uncertainty.
The FCA will write to small number of firms to seek clarification about whether they are declining or intend to decline BI claims. Companies are asked to reply by 15 May.
The FCA will seek to put cases before the Court on an agreed basis with the insurers concerned in order to get the fastest possible judgement. Individuals can still access the Financial Ombudsman or the courts if they qualify and wish to do so.
It is also proposing a series of measures to support both consumers and businesses who hold insurance products and who are facing other issues as a result of Covid-19.
The package of measures sets out the FCA’s expectations that insurance firms should consider whether their products still offer value to customers in the current situation and whether they can be doing more for those suffering a financial impact because of coronavirus.