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Insurance companies face possible UK action over pandemic payments



(Reuters) Insurance companies that do not treat customers fairly when calculating payments for business interruptions due to the crown virus crisis will face action by the UK Market Watchdog.

The Financial Conduct Authority (FCA) has taken eight insurance companies to court over the wording of business interruptions, which insurers say does not cover the pandemic, with a decision expected in mid-September.

But the case does not address how any resulting damages would be calculated, the FCA said on Monday.

"We can intervene and take further action where companies do not appear to meet our expectations and treat their customers fairly," the FCA said in a statement.

Some insurance companies deducted government loans ̵

1; which companies had received as a result of the pandemic – when calculating payments.

The FCA said this might be appropriate, but insurers should not adopt a one-size-fits-all strategy and make unifo rm deductions.

"Insurance companies will likely need to consider individually the detailed details of the policy, the claim and the use and application of the State aid received by the policyholder," the FCA said.

Similar formulations as those used in the test case by more than 60 insurance companies and can affect 370,000 policyholders, says the FCA.

Insurers already pay receivables on certain business interruption policies. The Association of British Insurers said its members expected to pay £ 900 million ($ 1.173 billion) for such claims this year due to the pandemic.

Analysts said a profit for the FCA could take the size of these payments to billions of pounds.


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