Watchdog seeks court declaration to bring clarity to business interruption claims
The Financial Conduct Authority (FCA) will seek a court declaration to resolve uncertainty around whether businesses can claim under business interruption insurance cover for coronavirus losses.
The watchdog said it was taking the action due to "continuing and widespread concerns about the lack of clarity and certainty for some customers".
FCA interim chief executive Christopher Woolard has previously said that in the majority of cases it is not believed that business interruption insurance will cover the losses incurred due to the crisis, but he has added "there remain a number of policies where it is clear that the firm has an obligation to pay out".
In a statement the FCA said: "We will work actively and promptly to seek to resolve issues causing uncertainty over business interruption (BI) coverage, to provide greater clarity for parties and help ensure there is not undue delay to payments where there are valid claims.
"We intend to do this by seeking to bring relevant cases to court as soon as possible for an authoritative declaratory judgement regarding the meaning and effect of some BI insurance policy wordings where there remains unresolved uncertainty. We are working to identify a sample of cases representative of all the most frequently used policy wordings that are giving rise to uncertainty, where it would be appropriate for us to bring such proceedings."
The watchdog said it had outlined its proposals to "a small number of relevant firms" and the Association of British Insurers. The firms identified have been asked to clarify their positions by 15 May.
Hospitality businesses have launched a campaign backed by legal experts in a bid to force the insurance sector to honour business interruption policies.
A crowdfunding campaign has been launched to take legal action against those insurers failing to pay out, led by Rob Atkinson, a leading hospitality lawyer from Black and White Hospitality, which operates the Marco Pierre White group of franchised restaurants and manages a portfolio of hotels across the UK.
Atkinson said: "This is very good news for all those across the hospitality sector. To have a body like the FCA add its weight behind the business interruption issue will hopefully ensure those who have taken out policies in good faith to cover themselves in a time of crisis get a resolution soon.
"But we still need to be ready to launch legal action if required. FCA intervention may add clarity but they have been clear that it is not intended to encompass all disputes. We must maintain the pressure from all angles and our crowdfund campaign does just that. "
