Most insurance policies bought by smaller companies do not cover for disruption caused by the coronavirus pandemic, Britain’s Financial Conduct Authority said on Wednesday, Trend reports with reference to Reuters.
Britain is in lockdown, with many companies shuttered and millions of people furloughed as the country heads for a deep recession.
The FCA said most company insurance policies only gave basic cover, with no obligation to pay out in relation to the COVID-19 pandemic.
“While this may be disappointing for the policyholder we see no reasonable grounds to intervene in such circumstances,” FCA interim chief executive Christopher Woolard said in a letter to heads of insurers.
“In contrast, there are 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.”
Such valid claims should be paid as soon as possible, such as by starting with an interim payment, as many insurers were already doing, Woolard said.
“If you disagree with doing so, we would like you to send to us the grounds for reaching that decision including how you believe it represents a fair outcome for customers. Your firm’s decision is likely to help inform our assessment of its culture,” Woolard said.