The topic of Business Interruption insurance is a complex fast moving one, with different insurance companies adopting different positions. On Friday 1st of May the Financial Conduct Authority (FCA) announced it is seeking legal clarity on business interruption (BI) insurance with the aim to resolve doubt for businesses who are facing uncertainty on their claims.
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 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”.
Both the Association of British Insurers (ABI) and the British Insurance Brokers’ Association (BIBA) have welcomed this move.
ABI Director General, Huw Evans, said:
“This is a welcome step from the FCA and insurers will look to work closely with the regulator to make this process a success. Although the vast majority of business interruption policies do not cover pandemics and the Government has confirmed it will not seek to retrospectively amend contracts, we support any process that will provide clarity and certainty for the minority of customers who are disputing whether they should be covered. For valid claims, leading ABI members have agreed a set of claims handling principles to ensure speedy processing, including interim payments.”
BIBA stated:
“It is our view that this action by the FCA will help to resolve issues for businesses and we urge the market to engage with this resolution activity.”
Also, the Chartered Insurance Institute (CII) commented on the FCA move on BI.
Matt Connell, director of policy and public affairs for the CII, said:
“The FCA’s decision to test the wording of certain business interruption contracts in court is preferable to a disorderly and potentially lengthy series of test cases that are less likely to reach a comprehensive and definitive solution.”
At Konsileo, we appreciate that this is a very stressful time for all business owners and we will share with you relevant insights into this fast developing situation as we become aware of it.
Our brokers are very happy to discuss any aspect of your insurance coverage and COVID-19 risk management programme with you. They also have access to additional COVID-19 resources and can offer industry-specific guidance.
