Coronavirus: The Financial Conduct Authority tells insurers to pay out or explain why not

The  Staff Canteen

According to BBC News, The Financial Conduct Authority has ‘ordered insurance companies to pay out claims to firms Disrupted by coronavirus "as soon as possible" or explain themselves to the watchdog’.

It aims to relieve pressure on businesses during the lockdown caused by the Coronavirus pandemic. The Staff Canteen reported two weeks ago that the Rick Stein Restaurant Group were struggling to get confirmation of a pay out from its insurers despite paying thousands of pounds a year for special pandemic cover.

Read the full BBC article

At the time Jack Stein said: “Our livelihoods are on the line. If the insurance money doesn’t come through, we will still go bust in August.”

According to the BBC, the FCA's interim chief executive, Christopher Woolard, wrote in a letter targeted at insurers in relation to claims from small and medium firms for business interruption cover, not individuals' policies, that a ‘key objective of the FCA is to ensure that financial pressures on policyholders are not exacerbated by slow payment’.

It continued: “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."

The FCA has told insurers if there are reasonable grounds to pay part of a claim but not the full claim, they must make an interim payment. If not, insurers must tell the FCA how they reached the decision and how it is "a fair outcome for customers".

A spokesperson for the Association of British Insurers said: "Insurers recognise this is a worrying time for all businesses and ABI members are committed to swift payment of valid claims and interim payments to their customers."

The FCA said that smaller companies, classed as firms with turnover of less than £6.5m and fewer than 50 employees, could take complaints to the Financial Ombudsman.

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The  Staff Canteen

The Staff Canteen

Editor 15th April 2020

Coronavirus: The Financial Conduct Authority tells insurers to pay out or explain why not