Authored by the Financial conduct Authority
This final guidance sets out the types of evidence and methodologies which policyholders may wish to use when proving the presence of coronavirus (Covid-19) in a particular area around their premises.
The guidance will provide clarity for all parties and help to ensure that the process of proving the presence of Covid-19 is made as simple as possible for policyholders and enable valid claim payments to be made as early as possible.
Why we’re issuing this guidance
This guidance builds on the High Court’s judgment and declarations and the additional statements from the Supreme Court in the context of insurers’ obligations under our rules to handle claims fairly. It is intended to:
- provide clarity for all parties
- help ensure that the process of proving the presence of Covid-19 is made as simple as possible for eligible policyholders and
- enable those policyholders to receive claim payments as early as possible
Who this applies to
This guidance is for:
- insurers (including managing agents at Lloyd’s)
- insurance intermediaries
We received many complaints that insurers were taking a narrow view of whether their business interruption (BI) policy wordings would provide cover in response to Covid-19. Our supervisory work confirmed that insurers were refusing most SME BI claims, with genuine debate about the meaning of some policy wordings. Some policies require the policyholder to prove the presence of Covid-19 in a particular area around their premises.
In June 2021, we began a test case in the High Court to provide certainty for all parties. Aspects of the High Court judgment were appealed to the Supreme Court, which delivered its judgment on 15 January 2021.
The declarations of the High Court relating to proving the presence of Covid-19 and covered by the draft guidance were not under appeal.
The guidance comes into effect on 3 March 2021 and will cease to have effect on 31 January 2022, by which time we expect that all issues relating to proving the presence of Covid-19 will have been resolved.
This guidance is our view and it does not prevent policyholders using other sources of evidence or putting forward their own arguments regarding the sources of evidence in this guidance.
Download the FCA’s final guidance HERE