FCA has announced its intention to obtain a court declaration to resolve contractual uncertainty in business interruption (“BI“) insurance cover. It is also proposing a series of measures to support both consumers and businesses who hold insurance products and are facing other issues as a result of Covid-19.
Business interruption insurance
In its statement on BI insurance, FCA says it intends to seek a court declaration due to continuing and widespread concerns about the lack of clarity and certainty for some customers making BI claims, and the basis on which some firms are making decisions to accept claims.
FCA is seeking to bring to court what it believes are the key relevant cases which provide the greatest clarity on specific policy clauses. It intends to do this on an agreed basis with the insurers concerned in order to get the fastest possible judgement, and is writing to a number of firms for clarification about whether they are declining, or intend to decline, BI claims. FCA has written to a few firms asking for information on whether they are declining claims and expects firms to reply by 15 May 2020. Based on the information received, it will consider which firms to ask to join the court process.
FCA is clear that this action is not intended to encompass all possible disputes, but is intended to resolve some key contractual uncertainties, and will enable the provision of an independent view on disputed policies. It will not determine how much is payable under individual policies, but will provide the basis for doing so.
FCA’s additional guidance proposals on product value will apply to all non-investment insurance products, regardless of customer type, and its proposals on coronavirus and customers in temporary financial difficulty apply to help consumers.
The package of measures sets out how FCA expects insurance firms to:
- ensure products continue to offer value and are appropriate for customers, taking into account the impact of Covid-19 and the firm’s ability to deliver the services their insurance covers; and
- help individual customers who may be finding it difficult to pay their insurance premiums or meet their premium finance payments as a result of Covid-19.
FCA is seeking comments on its proposal to help customers in temporary financial distress by 5 May 2020, and on those to assess the value of insurance products by 15 May 2020. If confirmed, the measures will apply shortly after these deadlines. Once implemented, FCA will review this guidance in 3 months and may revise the guidance if appropriate.