The ICO brought the test case against eight insurers, including Hiscox, RSA Group and QBE Insurance Group

fca-entrance-1

Entrance to FCA building. (Credit: FCA)

The UK Information Commissioner’s Office (ICO), the country’s independent data privacy watchdog, has warned insurers to payout on valid claims as early as possible following a High Court ruling last week on business interruption (BI) insurance.

London judges ruled that some of the world’s biggest insurers should not have rejected several claims from small companies hit by the Covid-19 pandemic.

Several policyholders whose businesses were affected by the Covid-19 pandemic are reported to have suffered significant losses, leading to large numbers of claims under BI policies.

The ICO brought the test case against eight insurers, including Hiscox, RSA Group and QBE Insurance Group.

In a letter published on BI insurance, the FCA said insurers should make interim payments wherever possible on policies where the legal process is complete or the claim has been accepted in full or in part.

The letter from interim chief executive Christopher Woolard said: “Our objective remains to ensure that slow payment does not exacerbate financial pressures on policyholders.”

Insurers must reassess and settle claims quickly apart from making interim payments

Insurers should give policyholders at least an initial update on the implications of the judgment by 22 September 2020, the letter said.

According to the letter, insurers must reassess and settle claims quickly apart from making interim payments wherever possible on policies where the legal process is complete or the claim has been accepted in full or in part.

The watchdog said the move is in line with its wider objectives of supporting business and consumers during the current Coronavirus situation.

The FCA is the conduct regulator for 59,000 financial services companies and financial markets in the UK. It is also the prudential supervisor for 49,000 firms, setting specific standards for 19,000 companies.