Ac­tion over Covid in­sur­ance cover

Irish Examiner - - Business -

In­sur­ers that are not fair in cal­cu­lat­ing pay­outs for busi­ness in­ter­rup­tion caused by 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.

“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.

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 60 in­sur­ers and could af­fect 370,000 pol­i­cy­hold­ers, the FCA said.

In­sur­ers are al­ready pay­ing claims on some busi­ness in­ter­rup­tion poli­cies. The As­so­ci­a­tion of Bri­tish In­sur­ers said its mem­bers ex­pected to pay £900m in such claims this year be­cause of the pan­demic. An­a­lysts said a win for the FCA could take the size of those pay­ments to bil­lions of pounds.

In Ire­land, the Cen­tral Bank, which reg­u­lates in­sur­ers, last month said it was ex­am­in­ing pos­si­ble le­gal ac­tion. Pub­li­cans are tak­ing in­surer FBD to court over its claim that busi­ness-dis­rup­tion poli­cies do not ap­ply in the Covid-19 pan­demic. FBD said last week it has set aside €30m should it lose the court chal­lenge.

Mean­while, Euro­pean stock mar­kets rose as man­u­fac­tur­ing sur­veys showed fur­ther re­cov­ery in July, fol­low­ing the lock­downs.

“In­vestors are shift­ing back to a more op­ti­mistic view on the global econ­omy, and the re­bound in oil pro­vides proof of this,” said Chris Beauchamp, chief mar­ket an­a­lyst at on­line bro­ker IG.

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