U.K. Markets Watchdog Seeks Legal Clarity on Virus Insurance
(Bloomberg) -- The U.K.’s top markets regulator said it will ask the courts to provide legal clarity on how insurers should handle claims made by companies battered by the coronavirus pandemic.
“Our intended court action is designed to resolve a selected number of key issues causing uncertainty as promptly as possible and to provide greater clarity for all parties, both insured and insurers,” Christopher Woolard, interim chief executive officer of the Financial Conduct Authority, said in a statement on Friday.
The issue came to the fore recently when insurer Hiscox Ltd. refused to pay out on claims made by companies that had policies covering “any occurrence of any human infectious or human contagious disease.” Hiscox said coronavirus didn’t count, so policy holders took their case to the FCA.
Since then, pressure from business groups and policy makers has intensified. Mel Stride, head of the U.K. parliamentary committee that oversees the financial industry, said recently that insurers need to go “the extra mile in meeting claims wherever possible.”
Insurers are facing crushing losses as the virus wreaks havoc with economies and markets around the globe. Swiss Re AG on Thursday joined the swelling chorus of firms pushing for governments to backstop potential losses as the industry gets overwhelmed. Countries including Germany and Belgium have already offered guarantees for credit insurance markets amid an expected flood of claims.
In addition to seeking clarity from the courts, the FCA said insurers should consider whether their policies still offer value to customers in the current crisis, Woolard said.
“Firms should also look at how they can help customers who may be experiencing financial difficulties as a result of the virus,” he said. “Many insurers are already taking some kind of action to assist their customers and we want to see a degree of consistency for consumers.”
©2020 Bloomberg L.P.