Insurance: Coronavirus

(asked on 19th May 2020) - View Source

Question to the HM Treasury:

To ask the Chancellor of the Exchequer, what steps he is taking to ensure that insurance companies make payments in respect of business interruption policies that cover the covid-19 outbreak.


Answered by
John Glen Portrait
John Glen
Paymaster General and Minister for the Cabinet Office
This question was answered on 3rd June 2020

The Government is in continual dialogue with the insurance sector to understand and influence its response to this unprecedented situation and is encouraging insurers to do all they can to support customers during this difficult period.

The Government is working closely with the Financial Conduct Authority (FCA) to ensure that the rules are being upheld during this crisis and fully supports the regulator in its role. The FCA rules require insurers to handle claims fairly and promptly; provide reasonable guidance to help a policyholder make a claim; not reject a claim unreasonably; and settle claims promptly once settlement terms are agreed. In addition, the FCA has said that, in light of COVID-19, insurers must consider very carefully the needs of their customers and show flexibility in their treatment of them.

On 1 May the FCA outlined its intention to seek a court declaration, on an agreed and urgent basis, and for a selected number of key issues, to resolve uncertainty for many customers making business interruption claims.

Subsequently on 1 June, the FCA announced the policy wordings that would be tested in the court action and insurers it had invited to participate directly, along with an initial list of policy wordings and insurers that will potentially be impacted by the Court’s decision on the representative sample. The FCA expects to publish a final list of all the relevant insurers and policies that may have impacted wordings in early July, and expects a court hearing to take place in late July.

However, it is important to note that most businesses have not purchased insurance that covers losses from non-property damage. Additionally, while some policies cover losses arising from any disease classed as notifiable by the government, or a denial of access to a building, most of these policies only cover a specific list of notifiable diseases or an incident specifically on the premises of the business. Insurance policies differ significantly, so businesses are encouraged to check the terms and conditions of their specific policy and contact their providers. The terms of a policy cannot be changed retrospectively.

The Government encourages businesses to seek assistance through the wider support package if they are in financial difficulty. Businesses should explore the full package of support set out by the Chancellor in the Budget, on 17 March, and on 20 March, which includes measures such as business rates holidays, the Coronavirus Business Interruption Loan Scheme, and wage support.

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