Financial Conduct Authority seeks legal clarity on business interruption insurance
The Financial Conduct Authority (FCA) has today announced it intends to seek legal clarity on business interruption (BI) insurance. This is to resolve doubt for businesses who are facing uncertainty on their claims.
It is also proposing a series of measures to support both consumers and businesses. This is for those who hold insurance products and are facing other issues as a result of coronavirus (Covid-19) crisis.
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 or if they can provide more financial support.
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 to review claims and settle them 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.”
Coronavirus may be having a temporary impact on the extent to which businesses can benefit from their insurance products. For example, liability insurance may temporarily not be relevant for some businesses. Particularly applying to businesses that are closing because of Government interventions linking to Covid-19.
Coronavirus may also be making it harder for people to afford their insurance and premium finance payments. The FCA is setting expectations for firms to take steps to help customers alleviate temporary financial distress. This is also to maintain insurance cover that meets their demands and needs.
The FCA said: “Customers who are struggling to afford their insurance or premium finance payments as a result of the impact of coronavirus should contact their insurer to discuss options.”
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