UK Regulator the Financial Conduct Authority (FCA) has asked business Interruption policyholders to get in contact with any disputed policy clauses over coverage for the COVID pandemic.
The regulator has already announced it is seeking to fast track legal opinion over a number of disputed clauses amid rising concern from policyholders over insurers’ approach to claims resulting from the impact of the pandemic.
In a statement the FCA said: “There is continuing and widespread concern about the lack of a positive response of some of those BI insurance policies, and the basis on which some insurers are making decisions in relation to claims.”
It added: “Acting in the public interest, the FCA will put forward policyholders’ arguments to their best advantage. We are aiming to obtain legal guidance in this way more quickly and at a lower cost to policyholders than would be the case if they took their own court actions.
“The FCA recognises that many claims will already be the subject of negotiation or other dispute resolution processes. This proposed action is not intended to impact the normal claims process. It is designed to assist policyholders, and particularly SMEs, whose claims are being refused when they think the firm should respond.”
The FCA said its action will not stop individuals from pursuing issues through negotiated settlement, arbitration, court proceedings as a private party, or taking eligible complaints to the Financial Ombudsman Service.
However, it has made it clear that result of the test case will be legally binding on the insurers that are parties to the test case in respect of the representative sample considered. It added that it hoped it would also provide persuasive guidance for the interpretation of similar policy wordings and claims, that can be taken into account in other court cases, by the Financial Ombudsman Service and by the FCA in looking at whether insurers are handling claims fairly.
“At this stage, we are inviting policyholders and insurance intermediaries who are aware of unresolved disputes with insurers over the terms of BI policies to engage with us, if they want us to take their concerns into account as part of the test case. In particular, we invite you to put forward:
- your arguments why you consider cover should be available, together with details of policies that you consider have not responded appropriately to a claim and
- brief relevant facts of the case
We will consider all arguments raised.”
The FCA has appointed Herbert Smith Freehills, and an external team of leading counsel highly experienced in insurance issues, to undertake the legal process.