Insurance Companies: Compensation

Treasury written question – answered on 22nd June 2020.

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Photo of Justin Madders Justin Madders Shadow Minister (Health and Social Care)

To ask the Chancellor of the Exchequer, what recent discussions he has had with representatives of the insurance sector on extending compensation for people that are affected by business closures as a result of covid-19 that are not covered by their insurance policy; and what additional support the Government plans to provide to businesses that have not had their business interruption cover triggered as a result of the covid-19 outbreak.

Photo of John Glen John Glen Minister of State (Treasury) (City), The Economic Secretary to the Treasury

The Government is in continual dialogue with the insurance sector and is encouraging insurers to do all they can to support customers during this difficult period. Furthermore, the Government is working closely with the Financial Conduct Authority (FCA) to ensure that the rules are being upheld during this crisis and fully supports the regulator in its role.

In addition, on the 1st of May the FCA outlined its intention to seek a court declaration, to resolve uncertainty for many customers making business interruption claims. This court case refers to a sample of policy wordings designed to be representative of the majority of disputed cases. On the 1st of June, the FCA announced the policy wordings that would be tested in the court action and insurers it had invited to participate directly, along with an initial list of policy wordings and insurers that will potentially be impacted by the Court’s decision on the representative sample. The FCA expects to publish a final list of all the relevant insurers and policies that may have impacted wordings in early July, and expects a court hearing to take place in late July.

However, the Government recognises that businesses who do not have appropriate insurance cover will require support from elsewhere, and encourages businesses to seek assistance through the wider support package if they are in financial difficulty, which includes measures such as business rates holidays, the Coronavirus Business Interruption Loan Scheme, and wage support.

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