Small businesses left angry by insurers’ refusal to payout over the COVID-19 pandemic will get their day in court.
The Financial Conduct Authority (FCA) said on Friday it intends to seek an urgent legal judgment on whether insurers should payout to small businesses who have business interruption coverage.
It comes after outcry among many small business owners at the fact some insurers will not pay out on policies despite wording covering “business interruption” and coverage for infectious diseases. Major London-listed insurer Hiscox (HSX.L) has been the target of particular ire. TV chef Raymond Blanc is among those fighting Hiscox for a payout and has enlisted lawyers to pressure the company.
“Our intended court action is designed to resolve a selected number of key issues causing uncertainty as promptly as possible and to provide greater clarity for all parties, both insured and insurers,” Christopher Woolard, interim chief executive of the FCA, said in a statement.
“It is clear that decisive action is appropriate given the severity of the potential consequences for customers.”
However, Woolard warned: “We believe in the majority of cases, business interruption insurance was not purchased to, and is unlikely to, cover the current emergency.”
The FCA on Friday also issued guidance to insurers for consumer policies on Friday. The regulator said insurers must “ensure products continue to offer value” and “help individual customers who may be finding it difficult to pay their insurance premiums”.
“Firms should also look at how they can help customers who may be experiencing financial difficulties as a result of the virus,” Woolard said. “Many insurers are already taking some kind of action to assist their customers and we want to see a degree of consistency for consumers.
“Today’s proposed guidance and statement aims to make our expectations clear to all firms in the insurance market and provide future certainty.”
Earlier this week Yahoo Finance UK highlighted anger among engaged couples who are struggling to get payouts from insurers over weddings cancelled due to the COVID-19 pandemic.