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FCA seeks legal clarity on business interruption insurance

FCA seeks legal clarity on business interruption insurance

FCA seeks legal clarity on business interruption insurance alongside package of measures to help consumers and small businesses


We have announced this morning that we are intending to seek legal clarity on business interruption (BI) insurance to resolve doubt for businesses who are facing uncertainty on their claims. We are also proposing a series of measures to support both consumers and businesses who hold insurance products and who are facing other issues as a result of Covid-19 (coronavirus).


Business interruption

Our statement today on BI insurance outlines that we intend to seek a court declaration, on an agreed and urgent basis, to resolve uncertainty for many customers making BI claims, and the basis on which firms are making decisions to accept claims.


We are seeking to bring to court what we believe are the key relevant cases which provide the greatest clarity on specific policy clauses as soon as possible to get an independent view on these disputed BI insurance policies if there remains unresolved uncertainty. We will seek to put cases before the Court on an agreed basis with the insurers concerned in order to get the fastest possible judgement. We are writing to a small number of firms seeking clarification about whether they are declining, or intend to decline BI claims and we expect firms to reply by no later than 15 May 2020.


Insurance guidance

The additional guidance proposals are designed to provide consumers with temporary support in the light of the exceptional circumstances arising from coronavirus and follow steps we have taken in other markets such as credit cards, overdrafts and personal loans.


The package of measures sets out how we expect insurance firms to:

  • ensure products continue to offer value and are appropriate for customers taking into account the impact of coronavirus taking into account the firm’s ability to deliver the benefits promised; and
  • help individual customers who may be finding it difficult to pay their insurance premiums or meet their premium finance payments as a result of coronavirus.


We are seeking comments on the proposal to help customers in temporary financial distress by 5 May and on those to assess the value of insurance products by 15 May. If confirmed, the measures to help customers in temporary financial distress will apply shortly after 5 May and those for value assessments shortly after 15 May. Once implemented the FCA will review this guidance in 3 months in the light of developments regarding coronavirus and may revise the guidance if appropriate.


For further information about both announcements please see our full press notice.

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