FCA Called On to Step In to Protect Businesses From The Brink

Companies are facing uncertainty as Coronavirus claims are rejected.

The SNP’s Shadow Chancellor (pictured) has written to the Financial Conduct Authority calling on it to step in and hold insurance companies to account, as businesses are pushed to the brink due to the coronavirus crisis and a refusal by firms to cover claims.

With the FCA previously writing to firms urging them to pay out, many businesses are still warning that insurance companies are not honouring their policies – which are inclusive of pandemic cover – and are threatening their futures.

With businesses’ claims needing processed, Alison Thewliss MP warned in a letter to the FCA that “by the time insurers respond (to the FCA), detailing the reasons for rejecting any claims, it will be too late for some businesses who will have already collapsed.”

Commenting, Alison Thewliss MP said:

“The coronavirus crisis has had a devastating impact on small and medium businesses, with many of them having to close their doors and furlough thousands of staff.

“This has been exacerbated by insurance companies determining that claims cannot be made on certain Business Interruption (BI) policies.

“I have heard from a number of businesses that despite having BI policies – in some cases covering pandemics, infectious diseases, and closures instructed by public authorities – insurers are refusing to honour claims for associated losses.

“Meanwhile, UKHospitality has informed the Treasury Select Committee that a staggering 71% of insurance claims made by their members have been rejected, with only 1% successful.

“That is extremely concerning and will undoubtedly push affected firms to the brink.

“While I welcome the action already taken by the FCA, it’s clear that time is of the essence.

“There is real worry that by the time insurers respond to the FCA, detailing the reasons for rejecting any claims, it will be too late for some businesses who will have already collapsed.

“Businesses have taken the prudent and practical step of taking out insurance policies to protect against unforeseen events and they believed they were fully covered.

“In these challenging times, small companies are telling me that they feel abandoned, and that without urgent support they will not survive.

“Referring complaints to the Financial Ombudsman Service will only add further delay.

“I urge the FCA to outline what further pressure it can bring to bear on insurance companies and brokers so that firms adhere to policies, and claims can be lodged and settled as quickly and diligently as possible.”