FCA continues case against insurers refusing to pay out over business interruption claims
A test case brought in by the financial watchdog against 8 insurance companies could mean significant changes for insurers, brokers and policyholders.
During the coronavirus pandemic, many businesses have had to close their doors due to widespread disruption and severe financial loss. Many small businesses and customers have made claims for their losses under their business insurance policies.
Due to the complex nature of business insurance, the variation of cover and the interpretation of some of the policy wording, there is a lack of clarity for both customers and firms. The refusal in payments from some insurers in regards to policyholder claims led to high levels of dispute and uncertainty, which prompted the Financial Conduct Authority (FCA) to get involved.
On Monday 20 July, the FCA launched a test case on behalf of these businesses that will run for a total of 8 days (20-23 July and 27-30 July).
The financial watchdog hopes the test case will provide clarity around complex contractual uncertainties for both the companies and insurers without the need for costly, individual court cases. The test case doesn’t seek to determine how much is payable under individual court cases, but it will provide the basis to do so.
The case will see 8 insurers directly defending their position, but according to the FCA, there are approximately 370,000 policyholders that stand to be affected by this ruling.
The insurers that agreed to defend the case are Arch, Argenta, Ecclesiastical, Hiscox, MS Amlin, QBE, Royal & Sun Alliance and Zurich, and their skeleton arguments can be found here.
You can watch the hearing live here Monday to Thursday this week and next.