UK regulator criticizes insurers for handling Covid-related claims

Some insurers have “failed to meet” regulatory requirements when processing coronavirus-related business interruption claims, while others have not consistently met them, Britain’s financial regulator has warned.

The Financial Conduct Authority said on Tuesday it would use “all regulatory tools” to address the “significant problems” it had encountered in analyzing how companies were handling such claims.

Business interruption claims have proven to be an area of ​​significant controversy for insurers since the coronavirus lockdown began in March 2020.

Many insurers have questioned the extent of losses claimed by companies, leading to court cases aimed at clarifying the extent of the liabilities.

The FCA launched a model case to seek clarity on the meaning of certain insurance terms, which led to a Supreme Court ruling in January last year intended to speed up decisions on thousands of small and medium-sized business claims. Other cases still need to be processed.

Tuesday’s statement highlighted some instances where insurers had handled cases well, including making interim payments based on incomplete information and efforts to issue statements to help policyholders.

However, the agency said some companies lacked clear information for executives to determine the causes of payment delays.

Claims handlers sometimes did not have easy access to policy wording. The authority also criticized the communication of some companies with policyholders.

“We expect all regulated entities to conduct their business in accordance with our rules and regulatory requirements,” the agency said. “Our work on processing BI claims shows that some companies have not met these requirements or have not consistently met them.”

The agency added that it encourages companies to review their processes.

https://www.ft.com/content/e0577fb9-528f-44dd-a87c-6479a9de3982 UK regulator criticizes insurers for handling Covid-related claims

Adam Bradshaw

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