Businesses around the UK have been hurt due to the coronavirus, but finding out if their insurance covers the interruption isn’t always easy. Now, the Financial Conduct Authority (FCA) has set out to make the situation clearer.
The UK’s financial markets watchdog has revealed it is going to bring relevant cases concerning business interruption policies to court in order to make it clearer what policyholders should expect their protection to be during the current crisis.
Moreover, the regulator is also proposing a series of measures to support both consumers and businesses who hold insurance products and who are facing other issues as a result of the coronavirus.
This smattering of new measures is aimed at pushing insurers to consider what value their policies still have in the days of COVID-19 and whether they could be doing more to support their clients, including looking into what insurers could do to help customers who are finding it difficult to pay their premiums because of the current crisis.
The FCA proposes to give insurers up to six months to assess this so that it can take into account effects of the coronavirus in a more rounded manner.
‘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,” said Christopher Woolard, interim chief executive of the FCA. “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.
“Our intended court action is designed to resolve a selected number of key issues causing uncertainty as promptly as possible and to provide greater clarity for all parties, both insured and insurers. It is clear that decisive action is appropriate given the severity of the potential consequences for customers.
“In addition to this court action, the current emergency has altered the value of some insurance products and we believe that insurers should be looking at both whether their products still offer value. Firms should also look at how they can help customers who may be experiencing financial difficulties as a result of the virus.
“Many insurers are already taking some kind of action to assist their customers and we want to see a degree of consistency for consumers. Today’s proposed guidance and statement aims to make our expectations clear to all firms in the insurance market and provide future certainty.”
The COVID-19 contagion has rocked the insurance industry considerably. For many, it has laid bare the limitations of their infrastructure and solutions. To some, this crisis has also showed the companies in the sector the need for them to innovate, opening the doors for deeper collaborations with InsurTech startups.
“When everything changes rapidly, the lean and agile startups really start to shine,” Stephen Brittain, co-founder of Insurtech Gateway, the InsurTech investor, recently told FinTech Global. “Passionate founders are pushing their fledgling companies to overcome the odds and will come out the other side stronger.”
He argued that the crisis “is going to [be] a huge accelerant for InsurTech.”
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