Firms denied insurance pay outs can now engage directly with the FCA

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Has your insurer refused to pay after your business closed? You can now engage with the watchdog directly as it prepares to launch court action

  • The FCA is planning to bring the first instance trial to the High Court as early as July, This is Money understands
  • More than a million businesses forced to close during coronavirus lockdown have policies that could be affected
  • Firms can now submit their cases to the FCA through dedicated web page 
  • Here’s how to help people impacted by Covid-19

By Will Kirkman For Thisismoney.co.uk

Published: | Updated:

Businesses who have been denied an insurance pay out over lost income due to coronavirus can now engage directly with the financial watchdog.

This month the Financial Conduct Authority revealed it plans to seek a legal judgment from the British courts to clarify whether insurers should pay claims made by firms forced to close by the lockdown.

This is Money understands the FCA is aiming to take its first test cases before the High Court as early as July. This comes after hundreds of struggling firms banded together to launch class action lawsuits against insurers.

Today, the FCA revealed a new web page which policyholders can use to submit their disputes with their insurers.

The FCA plans to test the policy wordings in dispute in the courts as early as July 

The FCA said: ‘There is continuing and widespread concern about the lack of a positive response of some of those business interruption insurance policies, and the basis on which some insurers are making decisions in relation to claims.’

The FCA wrote to insurers at the start of May asking for examples of policies which customers are arguing should pay out. This is Money understands more than 150 different policies have been submitted so far, which will be narrowed down to a collection of test cases before going to court.

However, some have raised concerns that insurers may use the FCA’s ongoing court action as an excuse to stall decisions on whether to pay claims.

The FCA today clarified: ‘The FCA recognises that many claims will already be the subject of negotiation or other dispute resolution processes. This proposed action is not intended to impact this normal claims process.’

The FCA has also set up an email list which you can sign up to here for updates as the court case progresses.  

>> To find out more about the court case, click here

What should firms do now? 

Many firms are already in survival mode and need cash now – not in several months. 

Eligible business owners can apply for a series of Government loans and income support schemes.  

However, all business owners who have already seen their business interruption claims rejected should immediately lodge a complaint with their insurer. 

At the moment, insurers have eight weeks to review complaints, after which time if firms are unhappy with the response, it’s possible to refer the complaint to the Financial Ombudsman Service. 

Insurers are still enforcing that minimum eight-week period, and are likely to argue that they shouldn’t have to process complaints faster because any FOS decision is likely to have to take into account the outcome of the FCA’s case.

It’s not yet clear if the FCA will review the complaints period or perhaps reduce it temporarily or in relation to coronavirus-related claims.

However, unless your policy is used as a test case by the FCA, it’s vital you go through these motions as soon as possible so that the Ombudsman can review your complaint when the High Court makes its judgment. 

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