UK financial watchdog seeks clarity over Covid insurance cover

Britain’s financial watchdog has said it would urgently ask the country’s courts to clarify uncertainty over whether businesses can claim compensation for disruption caused by the coronavirus pandemic.

The Financial Conduct Authority (FCA) also told all insurers to assess whether they should be giving partial policy refunds during the pandemic.

The UK’s national lockdown to fight the pandemic has forced many companies to temporarily suspend operations and furlough staff.

“We have been clear that we believe in the majority of cases business interruption insurance was not purchased to, and is unlikely to, cover the current emergency,” FCA interim chief executive Christopher Woolard said.

However, there remain a number of policies where it is clear that the firm has an obligation to pay out.

“The package of measures sets out the FCA’s expectations that insurance firms should consider whether their products still offer value to customers in the current situation and whether they can be doing more for those suffering a financial impact because of coronavirus,” the watchdog said.

Here, retail industry group Retail Excellence Ireland has said it is considering legal action against the insurance industry over alleged refusals by insurers to pay out over Covid-19 claims on the basis that the virus is not listed on existing business disruption policies.

The British Insurance Brokers Association said the FCA’s move to obtain clarity on business insurance was a step in the right direction.

- Reuters and Irish Examiner