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18 May 2020
The UK Financial Conduct Authority (FCA) is calling on brokers and insurance clients to provide information on issues they want a High Court business interruption (BI) test case to address.
The authority is seeking details on policies considered not to have responded appropriately and arguments on why cover should be available.
“We are inviting policyholders and insurance intermediaries who are aware of unresolved disputes with insurers over the terms of BI policies to engage with us, if they want us to take their concerns into account as part of the test case,” it says.
The FCA has instructed legal firm Herbert Smith Freehills, but is yet to say which insurers will be involved in the process. It says the result will be legally binding on the parties involved and will provide “persuasive guidance” for similar examples.
Business interruption insurance is not likely to cover the COVID-19 emergency in most cases, it says, but it’s seeking to provide clarity through the proposed court action.
European Insurance and Occupational Pensions Authority Chairman Gabriel Bernardino has said national governments should help provide insurance cover for future lockdowns.
“If we really want to build more resilience in our societies against situations like this pandemic, there is clearly a need to have in place mechanisms to cover it,” he told Reuters.
“To be honest, I think it’s only possible by combining public and private elements. I don’t think this is possible for the insurance industry alone to cover it.”
Last month the authority said insurers and reinsurers should take all necessary steps to ensure a robust level of funds to be able to protect policyholders and absorb potential losses.