Context
Following the Supreme Court’s judgment on the BI test case, handed down on 15th January 2021, the FCA has issued a Dear CEO letter which clarifies the next steps and the FCA’s expectations of insurers and managing agents.
Key points to note
- It is the FCA’s aim to ensure that all businesses with valid BI claims receive the payments due to them as soon as possible.
- The FCA’s objective remains to ensure that slow payment does not continue to exacerbate financial pressures on policyholders. It has also published a document which tables the High Court and Supreme Court outcomes by policy type which can be found here: https://www.fca.org.uk/publication/corporate/bi-insurance-test-case-table-high-court-supreme-court-outcomes.pdf
- The FCA believes the judgments in the test case give all insurers the clarity needed to conclude their claims processes with the majority of their BI customers, and insurers are encouraged to do so as quickly as possible.
- In some cases, the judgment will mean that previously rejected claims (and complaints) are now valid or that the value of customers’ valid claims will have changed.
- The FCA expects insurance firms to be clear on these points and on the next steps as firms write to all policyholders with affected claims or complaints.
- All insurers are expected to take a pragmatic, transparent and consistent approach with policyholders and pay valid claims in full as soon as possible to support customers during the current situation.
- Where the FCA perceives that insurers are not meeting its expectations, it has said it will use the full range of regulatory tools and powers to ensure compliance; the FCA will also continue to co-ordinate closely with the Ombudsman.