Covid-19 (coronavirus)

The FCA has set out information for insurers during the pandemic.

Travel insurance 

The things we’ll look at in particular, include the following:

• We’ll always consider individual circumstances including the relevant policy terms, when bookings were made and when the policy was taken out.
• We’ll take into account whether consumers have already been able to recover financial losses from their airline, tour operator, bank or credit card company.
• We’ll consider foreign and domestic government information about travel restrictions in the same way as the FCO advice, taking account of policy terms.
• We’ll consider self-isolation and cancellations due to sickness in the same way as we do with ‘travelling against medical advice’.
• We expect insurers to take a pragmatic view of decisions not to travel or to curtail a trip. We’ll bear in mind factors such as the purpose of travel, the rapid pace of changing advice and the ability of consumers to contact their insurer at the relevant time.
• We recognise the challenges of validating some claims. However, we expect consumers to be treated fairly, and we encourage insurers to consider carefully the available evidence including credible consumer testimony.

• We recognise that some consumers may have taken the difficult decision to cancel their trips earlier than insurers might usually expect. But insurers should consider whether a later claim would have been accepted – for example, if travel advice or restrictions would have meant the consumer would have ultimately had to cancel before departure date.

Read more about our approach to complaints about travel insurance.

Business protection (interruption) insurance 

The impact of Covid-19 on businesses has generated numerous business interruption insurance claims. Businesses have been affected, for example, because their staff are unwell or following government guidance to self-isolate, or because customers are unwilling or unable to make purchases in the light of government guidelines and restrictions.

We will consider the judgement in the FCA’s business interruption test case and continue to take relevant law, including case law, into account when resolving complaints. If small businesses are unhappy with how their financial provider has handled their complaint, they should come to us and we’ll see if we can help.

In all cases with our service we stay in touch with the individual businesses and insurers to keep them informed. We continue to engage with a range of stakeholders on this issue, including those representing small businesses.

• When looking at claims that arise from something related to coronavirus, the starting point remains the policy terms and whether the claim falls within them.
• If the claim falls within the scope of the policy then the insurer should pay the claim in line with the policy or explain why an exclusion or condition in the policy means it doesn’t need to do that.
• But insurers should not only consider a strict interpretation of the policy terms but what’s fair and reasonable in the circumstances – taking into account in particular the unprecedented situation that the response to the virus has created.
• Insurers should take into account government and industry guidance in making claim decisions.
• On 5 March 2020 the UK Government listed  coronavirus as a “notifiable disease”, a requirement for a valid claim under some policies. In addition, on 17 March 2020 HM Treasury confirmed that “government advice to avoid pubs, clubs theatres, etc is sufficient for businesses to claim on their insurance where they have appropriate protection cover for pandemics in place”.
• On 23 March the Government said people should only leave their properties for one of four exceptional reasons and ordered the closure of non-essential shops and public spaces.
• Of course, given the fast-moving nature of the situation, many firms making business interruption claims may already be in financial difficulty because of a sudden loss of trade. Insurers might wish to consider where there’s a potentially valid claim if there’s scope to make interim payments earlier than they might otherwise do. The FCA has set out its expectations for insurers where cover is provided for within the policy.

Wedding insurance

We’ll consider what’s fair and reasonable taking into account all the circumstances – in particular the unprecedented situation created by the Covid-19 epidemic. We expect any insurer to remember its duties to deal with claims fairly and promptly, and not to reject a claim unreasonably.

Bearing that in mind, these are the sorts of issue an insurer might want to consider when dealing with a wedding insurance claim:

• Does the policy cover cancellation or rearrangement?
• Does it cover claims arising out of an outbreak of infectious or contagious disease?
• If so, but the insurer is relying on an exclusion to refuse the claim, for example for government act or regulation, the points to consider may include the following:
• Is government act or regulation defined in the policy – and if so, is it clear that this epidemic would be covered by that definition? What specific piece of legislation or regulation does the insurer think is relevant to the claim?
• If it isn’t defined then, thinking about the usual meaning of those words and considering the context of the clause in which the exclusion applies, is it reasonable to say it applies here?
• If it does apply, would the wedding otherwise have been able to go ahead – or would it have been cancelled in any event, perhaps because participants were themselves unwell or self-isolating? If so, it might not be fair to rely on the exclusion.

Insurers should not only consider the policy terms but also what’s fair and reasonable in the circumstances. So even if an exclusion does apply, we’d still expect insurers to take into account the unprecedented situation created by the Covid-19 response in deciding whether to rely on the exclusion.