FCA to resolve business interruption insurance uncertainty

The Financial Conduct Authority (FCA) intends to obtain a court declaration to resolve contractual uncertainty in business interruption insurance cover.

The announcement follows news that many SME insurance policies only offer basic cover for business interruption. As a result the majority of cases are unlikely to paid out by insurers.

This is the latest salvo in a battle between insurers and businesses across the country. Hiscox in-particular has received a lot of attention for failing to pay out, after a number of companies came together to form the Hiscox Action Group. The group states on its website that the insurers “sold Business Interruption cover which clearly covers Public Authority closures” but that they are declining claims and apparently “adding wording to the policy that simply does not exist.”

In a statement on its plans, the FCA said: “We are intending to take this action in the public interest to advance our consumer protection and market integrity objectives.

“We believe the circumstances of the current Coronavirus (Covid-19) emergency, and its effect on businesses holding business interruption policies means that any uncertainty needs to be resolved as quickly as possible.”

However the authority added the action only aims to solve any uncertainties by assisting both the insurer and insured. Finally adding “It will not determine how much is payable under individual policies, but will provide the basis for doing so.”

This action will also not prevent individuals from pursuing issues through the courts, or taking eligible complaints to the Financial Ombudsman.