UK watchdog steps up action over Covid-19 insurance cover             

A branch office of FBD Insurance near Baggot Street Bridge,Dublin, Ireland. FBD is a general insurer. File picture.

Insurers that do not treat customers fairly when calculating payouts for business interruption due to the coronavirus crisis will face action by Britain’s markets watchdog.

The Financial Conduct Authority has taken eight insurers to court over business interruption policy wordings, which the insurers say do not cover the pandemic, with a ruling expected in mid-September. 

But the case does not address how any resulting claims payments would be calculated, the FCA said. 

“We may intervene and take further actions where firms do not appear to be meeting our expectations and treating their customers fairly,” the FCA said in a statement.

Some insurers were making deductions for government loans - which businesses had received as a result of the pandemic - when calculating payouts. 

The FCA said this could be appropriate but insurers should not take a one-size-fits-all approach and make uniform deductions.

“Insurers are likely to need to consider individually the precise details of the policy, the claim and the use and application of the government support the policyholder received,” the FCA said.

Similar wordings to those in the test case were used by more than 60 insurers and could affect 370,000 policyholders, the FCA has said.

Payouts

Insurers are already paying claims on some business interruption policies. 

The Association of British Insurers said its members expected to pay £900m (€1bn) in such claims this year due to the pandemic. Analysts said a win for the FCA could take the size of those payments to billions of pounds.

In Ireland, the Central Bank, which regulates insurers, has said last month it was examining possible legal action. 

Publicans are taking insurer FBD to court over its claim that business disruption policies do not apply in the Covid-19 pandemic. 

FBD said last week it has set aside €30m should it lose the court challenge. 

Meanwhile, European stock markets rose as manufacturing surveys showed further recovery in July following the widespread lockdowns.                   

"Investors are clearing shifting back to a more optimistic view on the global economy, and the rebound in oil provides proof of this," said Chris Beauchamp, chief market analyst at online broker IG. 

-Reuters and Irish Examiner