COVID-19: FCA Dear CEO letter on expectations of insurers following High Court judgment in business interruption insurance test case

Concluding claims processes with customers. Insurers must take a pragmatic, transparent and consistent approach over any remaining evidence applying to individual claims. In the coming weeks, the FCA will publish additional information to assist the process of providing and assessing appropriate evidence on proximity and prevalence for "disease" coverage clauses.

Claims handling. In line with FCA guidance, insurers must assess the implications for relevant non-damage BI policy wordings, where the test case may affect the outcome of claims generally, including questions of causation. They should also reassess all potentially affected claims and complaints, unless properly settled on a full and final settlement basis, and, where applicable, keep the Financial Ombudsman Service (FOS) fully informed (see Legal update, COVID-19: FCA final guidance and feedback statement on business insurance interruption test case).

Government support. Insurers should consider the FCA's statement, which highlights the need to consider the appropriateness of deductions on a case-by-case basis in the context of their policy, and treat their customers fairly (see Legal update, COVID-19: FCA statement on non-damage BI settlements and deductions relating to government support).

Communicating with policyholders. Insurers must communicate directly, and as soon as possible, with policyholders to explain the next steps. By 22 September 2020, they must provide at least an initial update on the judgment's implications.

Providing the FCA with updated information on affected policies. The FCA will give further details on how to do this once it knows the scope of any appeal.