Mactavish has reviewed the list of insurance policies that the FCA has published as being subject to review by the Court in the Covid-19 related legal review of failed business interruption claims.
Mactavish is calling on Herbert Smith Freehills, which is representing the FCA in this case, to disclose if it also represents any of the insurers or brokers whose wordings will be subject to scrutiny since Mactavish believes that if that is the case it is difficult to see how conflicts of interest would not arise.
Mactavish believes that there is a public interest in this disclosure because the FCA, which will presumably be paying their fees, is funded by the taxpayer and was set up to be an independent body to protect the interests of consumers.
Mactavish has also discovered that several of the policy wordings in the policies being considered for the FCA’s legal case were drafted by brokers, not by insurers. Given this, it is calling on the regulator to run a more in-depth review of the role played by brokers around the failed Covid-19 business interruption claims. It says the Covid-19 crisis has revealed several conflicts facing brokers that it believes are detrimental to their clients.
Bruce Hepburn, CEO, Mactavish said: “For there to be complete confidence in its current legal case of BI insurance claims linked to Covid-19, and for any future reviews of the sector, we believe the FCA needs to be completely transparent about its processes, and which partners it chooses to work with and why.
“The insurance industry is riddled with conflicts between insurers, brokers and law firms and the FCA needs to guarantee and demonstrate to beleaguered British businesses that its process is totally transparent and the potential for legal and commercial conflicts is minimized through active management.
“The FCA is currently working with Herbert Smith Freehills on its court case review of BI claims. We believe the law firm has close relationships with many insurers and/or brokers. It may have advised on the very wordings being tested by the Court. In the spirit of transparency those insurers and brokers should agree that their identities should be disclosed to demonstrate there is no risk of any conflict of interest arising.”