The UK Financial Conduct Authority will seek court rulings over disputed business interruption policies to help address wider uncertainty about coverage.

The regulator says it is identifying sample cases representative of frequently used policy wordings that are causing issues and where it would be useful to receive “an authoritative declaratory judgment”.

“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,” Interim CEO Christopher Woolard said.

“It is clear that decisive action is appropriate given the severity of the potential consequences for customers.”

The FCA says in most cases business interruption insurance is not likely to cover the COVID-19 emergency, but there are a number of policies where related cover is provided and it’s important those claims are assessed and settled quickly.

“There are also some other policies where firms may consider there is no doubt about wording and decline to pay a claim, but customers may still consider there is genuine uncertainty about whether their policy provides cover,” Mr Woolard says.

The FCA has written to a number of firms asking them to clarify by May 15 whether they believe their policy wordings for BI losses arising other than from property damage provide cover.

The regulator says some customers may believe they have been mis-sold their BI policy by an insurer or intermediary.

“Customers can make a complaint if they are not satisfied with the product they have purchased or the outcome of their claim; and if they remain unsatisfied, they can complain to the Financial Ombudsman Service,” the FCA says.