The Financial Conduct Authority announced today it would be taking court action to sort out companies’ doubts over business interruption insurance.
The regulatory body said most policies were unlikely to cover the coronavirus crisis. However, the authority (FCA) added that there were still some where the insurer was obliged to pay out – and it said they must do so swiftly.
It also wants measures to help consumers and businesses holding insurance products who are facing other issues because of Covid-19.
The FCA called on insurance firms to consider if their products still offered value during the current situation and whether they could be doing more for those that were suffering financially because of coronavirus.
Interim chief executive Christopher Woolard 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.’
He added: ‘In addition to this court action, the current emergency has altered the value of some insurance products and we believe that insurers should be looking at both whether their products still offer value.
‘Firms should also look at how they can help customers who may be experiencing financial difficulties as a result of the virus. Many insurers are already taking some kind of action to assist their customers and we want to see a degree of consistency for consumers.
‘Today’s proposed guidance and statement aims to make our expectations clear to all firms in the insurance market and provide future certainty.’
It is consulting with companies and will be putting key relevant cases to the court with the aim of getting the quickest possible judgment
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