FCA has sent a Dear CEO letter on business interruption insurance for SMEs. It says its research to date indicates that most policies have basic cover, do not cover pandemics and so would not be obliged to pay out in relation to Covid-19. It sees no need for regulatory intervention, even though the lack of cover will be disappointing to policyholders.
However, it notes there are also policies where it is clear the firm should pay out and, in these cases, claims must be assessed and settled quickly. FCA urges firms to pay out as quickly as possible, and to consider making interim payments if they dispute part of a claim, or its full amount. If firms are not willing to do this, FCA wants them to explain to it why the are not, including how the decision represents a fair outcome for customers.
The letter also notes that some SMEs will be within FOS jurisdiction, and can help them to get more timely decisions and payouts (up to £355,000) than a court process. FOS is considering, and will share, its approach to deciding complaints about business interruption insurance.
FCA has set up a new small business unit to co-ordinate issues across small businesses and to help support firms.