(Reuters) – Britain's market watchdog said on Friday that it was "critical" that insurers pay valid claims in full as early as possible, following a High Court decision on business interruption insurance.
London judges ruled that some of the world's largest insurers were wrong when they rejected tens of thousands of claims from small businesses affected by the COVID-19 pandemic, the Financial Conduct Authority said earlier this week. Ltd., Royal & Sun Alliance Insurance PLC and QBE Insurance Group Ltd., said that the court had found in favor of the policyholders' arguments in the majority of key issues. Insurers should make interim payments where possible, the FCA said in a "Dear CEO" letter published on Friday.
"Our goal is to ensure that slow payments do not exacerbate the financial pressure on policyholders," the letter from interim CEO Christopher Woolard said, adding that the FCA could use its regulatory powers if it believed insurers were acting too slowly.
The trial has attracted a great deal of attention as it is estimated to affect 370,000 companies, 60 insurance companies and billions of pounds in insurance claims.
Insurers should give policyholders at least an initial update on the consequences of the ruling on September 22, the letter says.
Separately, the FCA said that the court would process applications for appeal on October 2.
If the verdict is appealed, it can jump directly to the Supreme Court to reduce delays for fraudulent companies, lawyers said.