Covid BI Claims

UK regulator the Financial Conduct Authority (FCA) has undertaken a review of the claims handling process for business interruption claims related to COVID-19, and has raised concerns in some areas.

Overall, the FCA concluded that insurers paid out interim payments and reallocated resources quickly, while proactively communicating with policyholders to help them with claims following the test case judgment handed down by the Supreme Court last year.

However, it also felt there were shortfalls in how firms handled claims from vulnerable customers, record-keeping of policy wordings, and identifying where customers experienced unnecessary delays.

In response, the FCA has set out examples of good practice and where insurance firms have fallen short of expectations to assist firms in their approach to handling all claims to ensure customers are treated fairly throughout the insurance claims process.

The review comes as the latest business interruption insurance claims data shows that £1.5 billion has now been paid out by insurers to over 36,000 small businesses as a direct result of the test case.


“We have been working alongside insurers to ensure that claims are settled quickly, but we are not complacent, and today’s report is clear that, while we have observed good practice, there are lessons to be learned for the handling of all claims,” said Sheldon Mills, Executive Director of Consumers and Competition.

“As consumers and businesses across the country are affected by inflationary pressures and the rising cost of living, it is crucial that insurers are handling claims promptly and treating customer fairly.”

Among the key areas were insurers were identified as not meeting FCA standards, the regulator said firms and their partners did not produce clear and robust conduct management information, which affected their ability to identify and address delays in the claims process.

Some firms also did not have records of policy wordings that were easily accessible for claims handlers, which resulted in delays for customers, and vulnerable customers were not adequately identified.

The FCA also noted that quality assurance reviews were too focused on the financial outcome of the claim rather than the full customer experience and failed to identify where customer experienced unreasonable delays, while customer communications were not always tailored to the recipient.