business interruption insurance

As reported in May, the insurance industry has been coming under increasing pressure (from both class-action lawsuits and court action by the Financial Conduct Authority) for their refusal in many instances to pay out Business Interruption Insurance claims to companies that have been devastated by COVID-19.

As part of its review, the FCA reviewed over 500 relevant policies and has now provided an update on the progress of its court action on business interruption (BI) insurance policies.

The FCA has now published a (non-exhaustive) preliminary list of affected insurers and policies. In July, they expect to publish an updated, consolidated list of the disputed business interruption insurance policies that will be affected by the test case.

Draft guidance has also been published which sets out the regulator’s expectations for insurers and insurance intermediaries when handling claims and complaints about business interruption policies during this test case.

The guidance highlights the particular steps that insurers should be taking to:

  • identify the potential implications of the test case on their decisions to reject claims
  • keep policyholders informed about the test case and its implications for policies, claims and any settlement offers
  • treat policyholders fairly when the test case is resolved

The FCA has stated that in their view is that most SME insurance policies are focused on property damage and in those cases, insurers are not obliged to pay out in relation to COVID-19. The court case focuses on the remainder of policies that could be argued to include cover.

Interim Chief Executive of the FCA, Christopher Woolard, has said that,

“The court action we are taking is aimed at providing clarity and certainty for everyone involved in these BI disputes, policyholder and insurer alike. We feel it is also the quickest route to this clarity and by covering multiple policies and insurers, it will also be of most use across the market. The identification of a representative sample of policies and the agreement of insurers who underwrite them to participate in these proceedings is a major step forward in progressing the matter to court.”

What should home improvement companies do if their claim is rejected?

If you believe your Business Interruption Insurance does cover for pandemics, but your claim has been rejected, we urge you to contact us for advice and guidance. At QASSS, we can help with the claims process and can arrange access for home improvement companies to a Loss Adjusting service, should you need independent advice regarding complex, major or difficult claims.

To find out more about this specialist service, contact Scott Robinson our Commercial Director on 0161 676 0919.