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05 May 2020
The Financial Conduct Authority (FCA) is seeking legal clarity around some aspects of business interruption (BI) insurance.
The FCA is taking action in response to widespread concerns and uncertainty about the basis on which some firms are making decisions relating to the coronavirus (COVID-19) pandemic.
Many small and medium-sized enterprises (SMEs) have found it unclear as to whether they can claim or are finding it difficult to claim on BI insurance policies taken out prior to the pandemic.
The FCA is writing to some insurers seeking clarification about whether they are declining or intend to decline BI claims. The FCA expects these firms to reply and clarify their position by no later than 15 May.
Christopher Woolard, interim CEO of the FCA, said: 'We have been clear that we believe in the majority of cases, BI 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.'