The Financial Conduct Authority has announced this morning it intends to seek legal clarity on business interruption insurance to resolve doubt for UK businesses facing uncertainty on their claims during the coronavirus pandemic.
The regulator has also proposed a series of measures to help insured businesses and consumers who face other issues resulting from Covid-19.
It gives insurance companies a set of expectations to consider when determining whether their products still offer value to customers in the current situation and whether they can do more for those suffering financially because of coronavirus.
FCA interim chief executive Christopher Woolard said: “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.
“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.”
The FCA’s full statement can be read here.