The U.K.’s Financial Conduct Authority (FCA) is launching a consultation on guidance to help insurers and their customers determine the validity of insurance claims stemming from the disruption caused by the Covid-19 outbreak.
The FCA said that its draft guidance builds on a court ruling that came from a test case brought by the regulator seeking the court’s interpretation on whether particular business interruption policies cover the effects of a pandemic.
That ruling, which is currently under appeal to the U.K.’s Supreme Court, found that 12 of 21 policy types do cover the effects of a pandemic, while the other nine do not.
The Supreme Court’s decision on the appeals is expected in January 2021.
In the meantime, the FCA is developing its own guidance, which builds on the findings of the lower court.
The regulator said it aims to “ensure that the process of proving the presence of coronavirus is made as simple as possible for eligible policyholders.”
“This will enable them to receive claim payments as early as possible,” the FCA said in a release.
The FCA noted that, while aspects of the lower court decision are still under appeal, the findings on proving the presence of Covid-19 — which will be covered in the regulator’s guidance — are not under appeal and are not expected to be affected by the Supreme Court’s ultimate ruling.
“By issuing this document, we are not pre-judging the outcome of the appeals to the Supreme Court. Should that outcome affect the draft guidance, we will amend it accordingly,” the FCA said.
The FCA’s draft guidance sets out the sort of evidence that policyholders can use to prove the presence of Covid-19 within a particular area around their workplace, as required by certain policies. It also gives guidance to insurers on assessing that evidence to ensure that they handle claims fairly.
The FCA is seeking feedback on the consultation by Jan. 18, 2021, and it aims to issue final guidance as soon as possible after the Supreme Court issues its decision.