The Financial Conduct Authority (FCA) has published a short consultation on draft guidance asking all insurers to check their policy wordings against those that the regulator intends to test in High Court next month.
So far, the FCA has approached 56 insurers and reviewed more than 500 relevant policies from 40 insurers, with a sample of 17 business interruption policy wordings identified as capturing the majority of the key issues that could be at dispute in the test case brought in response to rejections of coronavirus (Covid-19) claims.
The FCA now wants insurers to check their business interruption policy wordings against those that the regulator intends to test to see if theirs will be affected by the outcome of the test case. A list of all the relevant insurers and policies will be published in early July.
The consultation on draft guidance also sets out the FCA’s expectations of all firms handling business interruption claims and any related complaints between now and the court decision.
The British Insurance Brokers’ Association has provided a useful update on the draft guidance and what is likely to happen next.
Christopher Woolard, interim chief executive at the FCA, said: “The court action we are taking is aimed at providing clarity and certainty for everyone involved in these business interruption disputes, policyholder and insurer alike. We feel it is also the quickest route to this clarity and by covering multiple policies and insurers, it will also be of most use across the market.”
“The identification of a representative sample of policies and the agreement of insurers who underwrite them to participate in these proceedings is a major step forward in progressing the matter to court.”
The insurance industry’s belief that state support will ultimately be needed to fund future pandemic responses is closer to realisation with the appointment of Amber Rudd, the former home secretary, to a Pandemic Re working group.
Pandemic Re was formed in April. Its steering committee will work with Pool Re to ensure the insurance industry can strengthen its response to future pandemics. It is chaired by Stephen Catlin of Convex. Other members include Maurice Tulloch of Aviva, Stephen Hester of RSA, Julian Enoizi of Pool Re, Nick Frankl