FCA warns insurers over payments to businesses
The Financial Conduct Authority has told general insurers to make speedy payments to businesses affected by the Covid-19 crisis and has set up a unit to monitor treatment of small enterprises.
The regulator said business policies with basic cover do not include pandemics and that in these cases the insurer would not be obliged to pay out for business interruption caused by the crisis.
"While this may be disappointing for the policyholder we see no reasonable grounds to intervene in such circumstances," the FCA said in a letter to insurance chief executives.
When the insurer is obliged to pay on a policy, claims should be assessed and settled quickly the FCA said. If there are grounds to make a partial payment then companies should make an interim payment. If companies do not do this they must tell the FCA why and their decision will be taken into account in judgments about a company's culture, the FCA said.
"It is important that claims are assessed and settled quickly," the FCA's interim chief executive, Christopher Woolard, said in the letter. "A key objective of the FCA is to ensure that financial pressures on policyholders are not exacerbated by slow payment, rather, such claims should be paid as soon as is possible. This is consistent with the wider objective of the authorities to support business and consumers during the current crisis."
Woolard's message about treatment of businesses follows a letter he sent to insurance bosses in March telling them to treat customers fairly during the coronavirus crisis.
He said insurers and brokers had an important role in supporting businesses that may not be sure whether they have the right cover in place. He told them to communicate clearly and speedily and said the FCA was collecting information from firms about how they interpret policies.
The FCA has set up a small business unit overseen by senior officers to support regulated financial firms, gather information about how small businesses are treated during the crisis and respond to problems. The division is headed by Andrew Wigston, a member of the FCA's senior leadership team, and overseen by Jonathan Davidson, the FCA's retail supervision head, and Sheldon Mills, interim strategy head.