UK’s FCA de­mands in­sur­ers treat busi­ness clo­sure claims fairly

Irish Independent - - Business - Donal O’Dono­van and Carolyn Cohn

IN­SUR­ERS that do not treat cus­tomers fairly when cal­cu­lat­ing pay­outs for busi­ness in­ter­rup­tion cover due to the coro­n­avirus cri­sis will face ac­tion by the UK’s mar­kets watch­dog.

The UK’s 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.

That case will be closely watched here for any read across to four test cases taken by pub­li­cans against Ir­ish in­surer FBD over its re­fusal to pay out on hun­dreds of busi­ness in­ter­rup­tion poli­cies. The pub­li­cans say they were in­sured against losses while FBD says shut­downs caused by the pan­demic fall out­side the poli­cies.

The Ir­ish cases will be heard in Oc­to­ber, af­ter the UK rul­ing. FBD has set aside €30m in re­la­tion to the claims and court process.

The Cen­tral Bank of Ire­land, which reg­u­lates in­sur­ers here, as well as the Min­is­ter for Fi­nance Paschal Dono­hoe, have said in­sur­ers should treat cus­tomers fairly and should find for the cus­tomer if terms of a con­tract are am­bigu­ous, but has not in­ter­vened di­rectly like Bri­tish au­thor­i­ties have.

In the UK, the FCA said the case be­fore the courts does not ad­dress how any re­sult­ing claims pay­ments would be cal­cu­lated.

“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 yes­ter­day.

Some in­sur­ers were mak­ing de­duc­tions for govern­ment loans – which busi­nesses had re­ceived as pan­demic re­lief – when cal­cu­lat­ing pay­outs.

The FCA said this could be ap­pro­pri­ate but in­sur­ers should not take a one-size-fit­sall 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 £900m (€1bn) in such claims this year due to the pan­demic.

An­a­lysts said a win for the FCA could in­crease those pay­ments to bil­lions of pounds.

Ad­di­tional re­port­ing Reuters

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