The Financial Conduct Authority (FCA) has told insurers that the High Court judgement in its business insurance tests case has created the ability for claims to be quickly paid to struggling businesses.
The regulator’s Interim CEO, Christopher Woolard (pic) has written to the CEOs of the UK insurance firms to warn that the FCA expects to see the speedy payment of claims which have been deemed to be valid by last week’s judgement.
“The High Court judgment on the test case has brought greater clarity and certainty for all parties,” he said. “It is critical that this results in insurers paying valid and successful claims in full at the earliest possible date to support business and consumers during the current situation. Where we see that insurers are not meeting the expectations set out here, we will use the full range of our regulatory tools and powers to ensure they do so.”
The letter added: “The objectives of the BI test case have and continue to be to achieve clarity as quickly as possible for policyholders and insurers on whether certain BI policies and wordings respond to the Covid-19 pandemic. This judgment is a critical step in obtaining that clarity.”
Mr Woolard said: “In some cases, insurers will feel that the judgment gives them the clarity they need to now conclude their claims processes with their customers. We encourage these insurers to do so as quickly as possible.
“In other cases, insurers may determine they need to wait to understand whether a specific point in the judgment will be appealed. As you write to your policyholders over the coming week, we expect you to be clear to your policyholders on your next steps.”
For thre FCA those steps include speed of payment for valid claims and clear communication with policyholders over the status of their claim and any payments.
“Our objective remains to ensure that slow payment does not exacerbate financial pressures on policyholders,” added Mr Woolard. “It is important that insurers reassess and settle claims quickly, including making interim payments wherever possible on policies where the legal process is complete or the claim has been accepted in full or in part. This is consistent with the wider objectives of the FCA to support business and consumers during the current Coronavirus situation.
“We also expect all insurers to take a pragmatic, transparent and consistent approach to their interactions with policyholders over any remaining evidence that applies to individual claims, rather than these creating additional barriers or delays to paying valid claims. This includes evidence for proximity and prevalence for ‘disease’ coverage clauses. In the coming weeks, we will publish additional information to help policyholders and insurers with the process of providing and assessing appropriate evidence on proximity and prevalence.”