In an open letter from Christopher Woolard, the chief executive of the Financial Conduct Authority (FCA), most firms in the UK are not covered for Covid-19 on their insurance.

The letter said: “Based on our conversations with the industry to date, our estimate is that most policies have basic cover, do not cover pandemics and therefore would have no obligation to pay out in relation to the Covid-19 pandemic.”

Go deeper with GlobalData

Data Insights

The gold standard of business intelligence.

Find out more

It continued: “While this may be disappointing for the policyholder, we see no reasonable grounds to intervene in such circumstances.”

This follows expectations for insurance firms set by the FCA in March 2020 regarding the Covid-19 pandemic. The FCA expected insurers to carefully consider the needs of their customers and show flexibility in treatment.

However, the open letter honed specifically on business interruption insurance.

Furthermore, it stated that there are policies where “it is clear that the firm has an obligation to pay out”.

How well do you really know your competitors?

Access the most comprehensive Company Profiles on the market, powered by GlobalData. Save hours of research. Gain competitive edge.

Company Profile – free sample

Thank you!

Your download email will arrive shortly

Not ready to buy yet? Download a free sample

We are confident about the unique quality of our Company Profiles. However, we want you to make the most beneficial decision for your business, so we offer a free sample that you can download by submitting the below form

By GlobalData
Visit our Privacy Policy for more information about our services, how we may use, process and share your personal data, including information of your rights in respect of your personal data and how you can unsubscribe from future marketing communications. Our services are intended for corporate subscribers and you warrant that the email address submitted is your corporate email address.

It added: “For these policies it is important that claims are assessed and settled quickly. A key objective of the FCA is to ensure that financial pressures on policyholders are not exacerbated by slow payment, rather, such claims should be paid as soon as possible. This is consistent with the wide objective of the authorities to support business and consumers during the current crisis.”

In addition, the letter addressed policy disputes. Where a policyholder is a small business with annual turnover of less than £6.5m, with fewer than 50 employees or an annual balance sheet below £5m, it is in the jurisdiction of the Financial Ombudsman Service. This is likely to offer a faster decision than going through the courts.

The FCA has also set up a small business unit, headed up by Andrew Wigston. the unit will coordinate the activities of the FCA across small business issues, ensuring firms are supported through the challenges of Covid-19.