Following the legal certainty it sought on business interruption claims, it is to be hoped that the FSCA will follow the example of the UK regulator in quickly setting guidelines and principles for insurers to ensure fair treatment of clients.
The UK judgment on business interruption insurance resolved several key contractual uncertainties and issues surrounding causation and provided much greater clarity to both policyholders and insurers. As a result of the ruling, the Financial Conduct Authority (FCA) issued a Dear CEO letter outlining the specific expectations of insurers following the judgment.
The FCA’s letter dated 22 January 2021, includes information about how it expects insurers to handle claims and complaints following the judgments, making interim payments where appropriate, ‘stopping the clock’ on claims and complaints deadlines during the test case, full and final settlements, and considerations that should be taken into account when applying deductions of government support received by policyholders. One of the actions that insurers should undertake is to communicate with the impacted policy holders in the following week.
” We believe the Court judgments in the test case give all insurers the clarity they need to now conclude their claims processes with the large majority of their BI customers. We encourage all insurers to do so as quickly as possible. In some cases, the judgment will mean that previously rejected claims (and complaints) are now valid or that the value of customers’ valid claims will have changed. We expect you to be clear on these points and on your next steps as you write to all your policyholders with affected claims or complaints over the coming week,” the letter reads.
“Where we see that insurers are not meeting the expectations set out here, we will use the full range of our regulatory tools and powers to ensure they do so. We will also continue to co-ordinate closely with the Ombudsman,” the FCA concludes.
Some of the points made to brokers by insurers create the impression that resolving claims will not be plain sailing. It is imperative therefore that the FSCA also keeps a beady eye on developments to ensure fair treatment of long-suffering clients.
Click here to read an article by Law firm, Baker McKenzie, that provides key take-aways on the UK BI case.