Regulator hits out at insurers’ handling of Covid claims

INSURERS face a crackdown from the City watchdog after it found “significant issues” in the way they handled Covidera claims from businesses.

The Financial Conduct Authority (FCA) said insurers had “fallen short of expectations” in their handling of business interruption insurance claims during the pandemic, which resulted in severe delays in payouts to customers whose businesses were forced to shut.

In particular, the FCA pointed to poor record keeping, a lack of initiative in identifying vulnerable customers, untailored communications, and unsuitable quality assurance reviews, which were often too focused on the financial outcome of a claim rather than the overall customer experience.

‘It is crucial that insurers are handling claims promptly and treating customers fairly’

The FCA said it would use “all regulatory tools” available to address the problems uncovered.

Sheldon Mills, the FCA’S executive director of consumers and competition, said: “We have been working alongside insurers to ensure that claims are settled quickly, but we are not complacent, and today’s report is clear that, while we have observed good practice, there are lessons to be learned for the handling of all claims.

“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 customers fairly.”

Business interruption insurance became a source of controversy for insurers after lockdowns began in March 2020, with many small firms saying they were frustrated in their attempts to claim on their policies.