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Information from the Financial Conduct Authority

The Financial Conduct Authority (FCA) has created a section on their website https://www.fca.org.uk/consumers/insurance-and-coronavirus to provide guidance for consumers.  A relevant extract is shown below for our Commercial policy holders on Business Interruption.

Business interruption (BI) insurance

We understand that a number of businesses have been frustrated with their insurer, specifically in relation to their BI insurance. Based on our conversations with insurers to date, our estimate is that most policies have basic cover and do not cover pandemics. Therefore there is no obligation for the insurer to pay out claims in relation to the coronavirus pandemic. In cases where it is clear that the firm has an obligation to pay out on a policy, we expect insurers to assess and settle the claim quickly. Also, where there is a valid claim, we are encouraging insurers to issue interim payments to ease some of the burden on small businesses. If you bought your policy through an insurance broker, you may want to speak to them in the first instance.

If you are unhappy with your insurer’s approach (eg poor claims outcome, how the claim was dealt with, length of time) and your business annual turnover is below £6.5m, and has fewer than 50 employees or an annual balance sheet below £5m, it is likely to fall within the jurisdiction of the Financial Ombudsman Service, where you can refer your complaint to. This can offer the prospect of faster decisions (on claims of up to £355,000) than a Court Process and, where appropriate, more timely payments that help firms recover from the impact of coronavirus, if the outcome is successful.

Of course if FCA guidance to us changes we will update our clients accordingly.