FCA Dear CEO Letter on Insuring SMEs: Business Interruption

On 15 April, the FCA published a Dear CEO Letter focussing specifically on conduct in relation to business interruption ('BI') insurance

16 April 2020

This article was written by Anna Davis.

In the letter, the FCA is clear that it expects insurers and brokers to:

  • provide clear, accurate and timely information to policyholders
  • where it is clear a claim is covered, assess and settle claims quickly
  • where there are reasonable grounds to pay part of a claim, make an interim payment (and where firms disagree with doing so, the FCA states that they should send the FCA the grounds for reaching that decision including how they believe this represents a fair outcome for customers).

It also confirms that it sees no reasonable grounds to intervene where policies do not cover pandemics, even though this is disappointing for policyholders.

The Letter also outlines that the FOS is to share details of its approach to dealing with complaints about BI insurance, most likely through a published series of 'lead cases'. The FCA itself has established a small business unit, headed by Andrew Wigston. The unit will coordinate the FCA’s activities across small business issues and will gather intelligence about the treatment of small business by firms during the crisis.

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