A positive assessment of how business interruption (BI) insurance claims are being handled has been published by the Financial Conduct Authority (FCA). The body reviewed how firms were handling BI insurance claims after the January 2021 Supreme Court judgement clarifying the terms of customer cover in the wake of the Covid-19 crisis.

The review found insurers were paying out interim payments quickly, rapidly reallocating resources and taking a proactive stance in communicating with policyholders. Data published by the FCA shows that, by September 5 2022, £1.5bn ($1.71bn) had been paid out by insurers to over 36,000 small businesses as a direct result of the test case.

But the FCA also expressed concern about how claims from more vulnerable customers are being handled, how records of policy wordings are being kept, and too many delays it judges unnecessary.

Fair treatment crucial

Sheldon Mills, Executive Director of Consumers and Competition (pictured above), said: “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.”

Firms must adhere to conditions set out in PS22/9: A new Consumer Duty, which seeks to ensure customers are supported through the entire life cycle of a product. Mills said: “While we have observed good practice, there are lessons to be learned for the handling of all claims.”

The FCA has set out its key findings in full, showing examples of good and bad practice.