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Britain’s financial watchdog is urgently seeking court clarity on the insurance rights of companies whose business has been cut short by the Covid-19 pandemic.
The Financial Conduct Authority, which says it still believes that most claimants in business interruption policies do not have adequate coverage to guarantee a payment, is seeking a fast-track court statement to “resolve the uncertainty for many clients. who make claims. “
The FCA is taking key test cases to the courts that provide “the most clarity” on specific policy clauses that represent those most commonly used by insurers that have been disputed by companies that have been rejected for payment.
The UK government has said that these five tests must be met before considering reducing the coronavirus blocking restrictions:
- The NHS has sufficient capacity to provide critical care and specialized treatment across the UK.
- A sustained and steady drop in daily coronavirus deaths
- Reliable data to show that the infection rate is declining to manageable levels across the board
- Operational challenges including testing and personal protective equipment (PPE) are available with the supply capable of meeting future demand
- Confident that any adjustment to current measures will not risk a second spike of infections that overwhelms the NHS
“We have made it clear that we believe that in most cases, business interruption insurance was not purchased to cover the current emergency, and is unlikely to be,” said Christopher Woolard, acting chief executive officer of the FCA.
“However, there are several policies in which it is clear that the company has an obligation to pay for a policy. For these policies, it is important that complaints are promptly evaluated and resolved. There are also some other policies where companies may consider that there is no doubt about wording and refusal to pay a claim, but customers may still consider that there is real uncertainty as to whether their policy offers coverage. “
A group of more than 100 nightclubs, pubs and bars is planning coordinated legal action against insurer Hiscox for its failure to pay business interruption insurance claims.
Business owners have filed claims with Hiscox and other commercial insurers only to be told that their business interruption policies do not cover the pandemic.
The FCA also said Friday that insurers may have to consider reimbursing some premiums or suspending monthly payments for customers who don’t get value for their policies during the coronavirus shutdown.
For example, boiler coverage insurers may not be able to offer an annual service at this time, and liability insurance may not be temporarily relevant to businesses such as barber shops, bars and restaurants closed as a result of the government shutdown.
The FCA said it would allow insurers to default on the promised benefits of their policies for six months to “take the effects of the coronavirus more fully into account” and consider appropriate measures.
The FCA also said that insurance companies should seek to help individual clients struggling to pay premiums due to the coronavirus crisis.
The regulator, which has issued the same guidance in other markets, including credit cards, overdrafts and personal loans, said companies should consider options including premium pay vacations, late fees or late payment interest. And exemption from administration and cancellation fees.
