The Financial Conduct Authority (FCA) is seeking legal clarity
on the inability of some insurance customers to obtain compensation
for disruption amid the coronavirus crisis.
Businesses were forced to close their doors and furlough staff
after the lockdown measures were introduced in March. The vast
majority of businesses did not purchase business interruption
insurance and is unlikely to cover the current crisis.
The financial watchdog said it intends to resolve uncertainty
for customers and insurers in its court action. Interim boss
Christopher Woolard said: “It is clear that decisive action is
appropriate given the severity of the potential consequences for
customers.”
The FCA said the cases it chooses to bring before the court
“will be carefully chosen as a representative sample of the most
frequently used policy wordings that are giving rise to
uncertainty.”
FCA’s insurance guidance
The FCA also set out measures to support consumers and businesses
that hold insurance products.
The pandemic has “altered the value of some insurance products”.
The FCA has asked insurers to look at whether their products still
offer value are appropriate for customers. This might include
refunding some premiums or suspending monthly payments for a
certain period of time.
The watchdog has given insurers up to six months to assess this
issue to take into account the impact of coronavirus “in a more
rounded manner”.
Woolard has also insisted firms look at how they can help
customers who may be experiencing financial difficulties as a
result of the virus. The FCA said it expects firms to help
customers alleviate temporary financial distress.
Insurers will have a range of options to help customers. This
includes giving customers premium payment holidays and waiving
administration and cancellation fees.
The Financial Conduct Authority (FCA) is seeking legal clarity
on the inability of some insurance customers to obtain compensation
for disruption amid the coronavirus crisis.
Businesses were forced to close their doors and furlough staff
after the lockdown measures were introduced in March. The vast
majority of businesses did not purchase business interruption
insurance and is unlikely to cover the current crisis.
The financial watchdog said it intends to resolve uncertainty
for customers and insurers in its court action. Interim boss
Christopher Woolard said: “It is clear that decisive action is
appropriate given the severity of the potential consequences for
customers.”
The FCA said the cases it chooses to bring before the court
“will be carefully chosen as a representative sample of the most
frequently used policy wordings that are giving rise to
uncertainty.”
FCA’s insurance guidance
The FCA also set out measures to support consumers and businesses
that hold insurance products.
The pandemic has “altered the value of some insurance products”.
The FCA has asked insurers to look at whether their products still
offer value are appropriate for customers. This might include
refunding some premiums or suspending monthly payments for a
certain period of time.
The watchdog has given insurers up to six months to assess this
issue to take into account the impact of coronavirus “in a more
rounded manner”.
Woolard has also insisted firms look at how they can help
customers who may be experiencing financial difficulties as a
result of the virus. The FCA said it expects firms to help
customers alleviate temporary financial distress.
Insurers will have a range of options to help customers. This
includes giving customers premium payment holidays and waiving
administration and cancellation fees.