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FCA releases updated statement on non-damage Business Interruption (BI) settlements and deductions made for government support

Mar 25, 2021 | Business interruption, FCA

Link(s): https://www.fca.org.uk/news/statements/updated-statement-non-damage-bi-settlements-deductions

Context

The FCA has released an updated statement after identifying a number of complaints about insurers making deductions from BI settlements.

The complaints have been identified as part of the overall work with regard to Covid-19 BI claims and relate to issues with insurers who have made deductions from settlements, to account for Covid-19 government support paid to policyholders.

Key Points

  • The statement confirms that the FCA’s primary requirement is that where insurers have accepted liability, they should continue to handle and assess non-damage BI claims promptly and fairly, and to treat their customers fairly.
  • The FCA has reiterated details that were contained within the Dear CEO letter issued in September 2020.
  • Insurers should assess whether it is appropriate to make deductions on a case-by-case basis.
  • This assessment should be based on:
    • The exact type of Government support
    • How it is used
    • Type of policy and method of calculating the value of a BI claim
    • It is unlikely that a uniform approach will be suitable
  • Firms are expected to make proper consideration of the above matters when calculating settlement amounts and communicating with policyholders. The FCA expects firms to consider the treatment of government support at Board level and document their considerations and decisions.
  • In September 2020, the ABI confirmed that a number of insurers have agreed not to deduct certain grants from Covid-19 claim payments: Ageas, Allianz, Aviva, Axa XL, Axa, Chubb, Covea, Direct Line Group, Ecclesiastical, Hiscox, NFU Mutual, QBE, RSA and Zurich have agreed not to deduct the following grants:
    • Local Authority Grant
    • Small Business Grant
    • Leisure/Retail/Hospitality grants
    • Local Restrictions Support Grant (closed)
    • Local Restrictions Support Grant (open)
    • Additional Restrictions Grant (ARG) and
    • Local Restrictions Support Grant (LRSG (Closed) Addendum)

Next actions

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