Insurers face possible British action over calculation of pandemic payouts
LONDON (Reuters) - Insurers that do not treat customers fairly when calculating payouts for business interruption due to the coronavirus crisis will face action by Britain’s markets watchdog.
The Financial Conduct Authority (FCA) has taken eight insurers to court over business interruption policy wordings, which the insurers say do not cover the pandemic, with a ruling expected in mid-September.
But the case does not address how any resulting claims payments would be calculated, the FCA said on Monday.
“We may intervene and take further actions where firms do not appear to be meeting our expectations and treating their customers fairly,” the FCA said in a statement.
Some insurers were making deductions for government loans - which businesses had received as a result of the pandemic - when calculating payouts.
The FCA said this could be appropriate but insurers should not take a one-size-fits-all approach and make uniform deductions.
“Insurers are likely to need to consider individually the precise details of the policy, the claim and the use and application of the government support the policyholder received,” the FCA said.
Similar wordings to those in the test case were used by more than 60 insurers and could affect 370,000 policyholders, the FCA has said.
Insurers are already paying claims on some business interruption policies. The Association of British Insurers said its members expected to pay 900 million pounds in such claims this year due to the pandemic.
Analysts said a win for the FCA could take the size of those payments to billions of pounds.
LONDON (Reuters) - Insurers that do not treat customers fairly when calculating payouts for business interruption due to the coronavirus crisis will face action by Britain’s markets watchdog.
The Financial Conduct Authority (FCA) has taken eight insurers to court over business interruption policy wordings, which the insurers say do not cover the pandemic, with a ruling expected in mid-September.
But the case does not address how any resulting claims payments would be calculated, the FCA said on Monday.
“We may intervene and take further actions where firms do not appear to be meeting our expectations and treating their customers fairly,” the FCA said in a statement.
Some insurers were making deductions for government loans - which businesses had received as a result of the pandemic - when calculating payouts.
The FCA said this could be appropriate but insurers should not take a one-size-fits-all approach and make uniform deductions.
“Insurers are likely to need to consider individually the precise details of the policy, the claim and the use and application of the government support the policyholder received,” the FCA said.
Similar wordings to those in the test case were used by more than 60 insurers and could affect 370,000 policyholders, the FCA has said.
Insurers are already paying claims on some business interruption policies. The Association of British Insurers said its members expected to pay 900 million pounds in such claims this year due to the pandemic.
Analysts said a win for the FCA could take the size of those payments to billions of pounds.
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