Insurers told to speed up virus payouts

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The goal of today's letter is to focus specifically on insurer's conduct in relation to business interruption ("BI") insurance.

A chain is seen on the gates of a closed shopping arcade in Leeds city centre, West Yorkshire on April 14, 2020, as life in Britain continues during the nationwide lockdown to combat the novel coronavirus COVID-19 pandemic.

It comes as a raft of insurance firms are facing legal action after declining payouts for business interruption claims, despite stating that they would cover firms forced to shut due to a notifiable disease. He told them to communicate clearly and speedily and said the FCA was collecting information from firms about how they interpret policies.

"While this may be disappointing for the policyholder we see no reasonable grounds to intervene in such circumstances", the FCA said in a letter to insurance chief executives.

The BI issue has been well documented in places like the U.S.as legislation seeks to force the retroactive cover of BI claims after pressure from policyholders.

He added: "However, perceptions about how quickly a claim will be dealt with among SMEs buying insurance is significantly worse - our research shows that it is one of the areas that SMEs are most concerned about".

Mr Woolard admitted that following conversations with insurers, it was clear that most business interruption policies held by small and medium-sized businesses only had basic cover which did not include pandemics and therefore insurers had no obligation to pay out in relation to Covid-19.

Google tells all North America staff to work from home
The work from home recommendations were earlier given only to employees in the San Francisco Bay Area , Dublin , and Seattle. With the virus continuing to spread all over the globe, most countries are preparing full throttle to contain the spread.

'Insurers recognise this is a worrying time for all businesses and ABI members are committed to swift payment of valid claims and interim payments to their customers'.

In addition, firms who refuse to pay out were told to explain why and how they believe it represents a fair outcome for consumers. If companies do not do this they must tell the FCA why and their decision will be taken into account in judgments about a company's culture, the FCA said. The regulator notes that where a policyholder is an SME with an annual turnover of below £6.5 million, and fewer than 50 employees, or an annual balance sheet below £5million, a complaint is likely to fall within the Financial Ombudsman Service's ("FOS") jurisdiction.

The firm argued that this was because insurers have incurred significant losses on their investments and will "want to manage their cash flow more carefully than during normal circumstances".

In its letter to CEOs, the FCA also revealed the establishment of a new small business unit created to coordinate the activities of the FCA across small business issues. The division is headed by Andrew Wigston, a member of the FCA's senior leadership team, and overseen by Jonathan Davidson, the FCA's retail supervision head, and Sheldon Mills, interim strategy head.

Keith Richards, managing director of engagement at the CII, said: "We also support the FCA's focus on paying claims in a timely fashion".

Mactavish also noted that settlements could be slowed down because the claims departments at insurers are not at full capacity due to the lockdown. Each year, the CII interviews 2000 small businesses to gauge their trust in insurance.

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