The Financial Conduct Authority is seeking urgent legal clarity on business interruption insurance (BII), as businesses including law firms face confusion over their claims.
The regulator said it will bring key cases to court ‘as promptly as possible’ to get an independent view on disputed policies. In order to get the ‘fastest possible judgement’ it intends to put cases before the court on an agreed basis with the insurers.
Christopher Woolard, interim chief executive of the FCA, said: ‘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. However, there remain a number of policies where it is clear that the firm has an obligation to pay out on a policy. For these policies, it is important that claims are assessed and settled quickly.
‘There are also some other policies where firms may consider there is no doubt about wording and decline to pay a claim, but customers may still consider there is genuine uncertainty about whether their policy provides cover.’
A significant proportion of law firms have BII and insurers have had a surge in BI enquiries from practitioners, the Gazette understands. The Law Society intends to publish guidance on its website about the insurance in the next two weeks.
Director general of the Association of British Insurers Huw Evans said: ‘This is a welcome step from the FCA and insurers will look to work closely with the regulator to make this process a success. Although the vast majority of business interruption policies do not cover pandemics and the government has confirmed it will not seek to retrospectively amend contracts, we support any process that will provide clarity and certainty for the minority of customers who are disputing whether they should be covered.’