Insurers face enforcement action if they don’t pay up as soon as possible on business insurance claims following a landmark court ruling, Britain’s Financial Conduct Authority said on Friday.
The Supreme Court earlier this month ruled that many business insurance policies should cover losses caused by coronavirus lockdowns, and the FCA said insurers should now pay up as soon as possible on valid claims.
“Where we see that insurers are not meeting the expectations set out here, we will use the full range of our regulatory tools and powers to ensure they do so,” the FCA’s executive director for consumers and competition Sheldon Mills said in a letter to insurers’ chief executives.
The watchdog brought the test case on behalf of policyholders last June, saying it could affect 370,000 policyholders and 60 insurers, paving the way for an estimated 1.2 billion pounds ($1.6 billion) of claims.
Six of the world’s largest commercial insurers - Hiscox, RSA, QBE, Argenta, Arch and MS Amlin - argued many businessinterruption policies did not cover widespread disruption aftergovernment efforts to curb the virus from last March.
But the UK Supreme Court unanimously dismissed appeals bythe insurers in a comprehensive victory for the regulator and policyholders.
Mills said the FCA will request data regularly from insurers on their progress in handling claims, and on how many have been settled.
“Our intention is to publish some of these data,” Mills said.
The court judgments in the test case give insurers the clarity they need to now conclude their claims processes with the large majority of their business insurance customers, Mills said.
Some previously rejected claims and complaints are now valid or the values of claims have changed, he said
“We expect you to be clear on these points and on your next steps as you write to all your policyholders with affected claims or complaints over the coming week.”