The Financial Conduct Authority (FCA) is urging SMEs who have experienced difficulties making claims under business interruption (BI) insurance policies during the pandemic to join its test case challenging insurers’ decision making
The move is designed to assist policyholders, and particularly SMEs, whose claims are being refused when they think the firm should respond
The regulator says a large number of claims have been made as a result of the impact of Covid-19, and highlights continuing and widespread concern about the lack of a positive response of some of those BI insurance policies, and the basis on which some insurers are making decisions in relation to claims.
As a result, the FCA is taking a test case to court, in a bid to obtain legal guidance more quickly and at a lower cost to policyholders than would be the case if they took their own court actions.
The intended action will not prevent individuals from pursuing issues through negotiated settlement, arbitration, court proceedings as a private party, or taking eligible complaints to the Financial Ombudsman Service.
The result of the test case will be legally binding on the insurers that are parties to the test case in respect of the representative sample considered. It will also provide persuasive guidance for the interpretation of similar policy wordings and claims, that can be taken into account in other court cases, by the Financial Ombudsman Service and by the FCA in looking at whether insurers are handling claims fairly.
To support this process, the FCA is inviting policyholders and insurance intermediaries who are aware of unresolved disputes with insurers over the terms of BI policies to get in touch with details of policies that they consider have not responded appropriately to a claim and their arguments for why the claim should be paid.
The FCA has instructed solicitors Herbert Smith Freehills, and says a team from the regulator and the law firm will be available for discussion with action groups and policyholders and their legal representatives, for example at workshop style meetings.
The regulator will be using the arguments, policies and fact patterns put forward by policyholders to inform the sample of policy wordings and fact patterns (a summary of the key facts of a case) to be used in the court proceedings. Subject to certain statutory limitation, it will be making public all the ‘pleadings’ in the test case and publishing other material.
Any SME or other policyholder who wants to join in the FCA tests case should email any material by a deadline of 20 May to: biinsurancetestcase@fca.org.uk
