Alongside plans to seek a high-court ruling on a series of business interruption claims disputes, the FCA released guidelines for insurance companies
The FCA guidelines set out how insurers should treat business interruption customers (Credit: PxHere)
The FCA has released guidelines for insurance companies on how it expects them to behave in response to customers’ claims and complaints on business interruption policies.
The guidance came alongside further details on its plan to seek a High Court judgement on a series of disputed business interruption (BI) claims to give the wider market and its customers clarity on what specific policy wording should respond to a claim by paying out.
Claims and complaints
In terms of claims, the FCA stressed that firms must meet its expectations set out under the Insurance Conduct of Business Sourcebook (ICOBS).
While for complaints, it expects them to follow the dispute resolution rules (DISP).
It said: “Where policies do not respond to the current situation, we nevertheless expect all general insurance (GI) firms to meet their obligations under Principle 6, ICOBS and DISP when handling claims and any complaints arising from them, and to communicate clearly and sympathetically to their customers at all times.
“GI firms may also consider whether there is other help they could give their customers at this point (for example, signposting to other potential sources of support).”
No cover
Where there is no cover, the regulator said there could be “a gap between firms’ and customers’ understanding of what they thought was covered by the policy.”
“If the BI cover provided is not consistent with what the customer requested or instructed, or with what the customer was informed was being provided, then customers may raise these concerns as a complaint with their insurer or intermediary,” it added.
In some cases, customers may feel they have been mis-sold a policy by their insurer or intermediary, the regulator said.
“Where this is the case, customers can make a complaint if they are not satisfied with the product they have purchased or the outcome of their claim, and if they remain unsatisfied they can complain to the Financial Ombudsman Service,” it added.
Interim payments
The FCA reaffirmed its call that, where a claim isn’t entirely invalid, partial payment should be made while it is being evaluated.
“Our expectations under Principle 6 and ICOBS also apply to firms’ work to establish the amount due to be paid to customers where there are valid claims to be made under the policy,” it said.
“In some cases, it will be possible to make interim or partial payments while discussions around the final value of the claims remain ongoing.”
Further intervention possible from FCA on business interruption insurance claims
The FCA said the behaviour of firms towards their customers during this time and whether they meet these expectations will factor into its “business-as-usual supervision” as well “when assessing their culture”.
It also said it will be working closely with the Financial Ombudsman Service to keep an eye on what trends appear to suggest firms are succeeding or failing to meet its expectations to decide “where further regulatory intervention may be required.”