FCA’s BI claims handling report an “important reminder” – CII

The Chartered Insurance Institute (CII) has been quick to respond following the release of the Financial Conduct Authority’s (FCA) report on “lessons learned” from how the industry handled business interruption (BI) claims in the aftermath of the UK BI test case.

In its assessment, the FCA observed areas of good practice and areas for improvement. The positives include issuance of preliminary interim payments, use of different customer contact channels, and employment of technical external resource where needed.     

Meanwhile areas where companies did not meet the regulator’s expectations span from inadequate records of policy wordings, to a lack of relevant conduct-focused metrics when overseeing delegated partners, as well as the absence of clear and robust conduct-focused management information.

Commenting on the findings, CII policy and public affairs director Matthew Connell stated: “It is encouraging to hear that insurers did many things well in their response to business interruption claims, including dedicating resource to the issue at an early stage, developing proactive communications for customers, and making interim payments while only requiring basic information.

“The FCA report is right to focus on the speed in which claims were made in certain circumstances. Our latest research with SMEs on business interruption insurance, conducted in January and July this year as part of our Public Trust Index, shows that two key areas in which insurers can do most to improve consumer outcomes are: ‘repairs or replacement items are completed/delivered at a time to suit me’, and ‘my claim is settled quickly’.”

Connell noted that many insurers use technology to address the issues, while at the same time giving customer-facing staff the autonomy to make decisions for the benefit of customers.

“The FCA’s report is an important reminder that insurance is not a commoditised product, but is a complex service delivered by people with a wide range of skills from risk management to effective communications,” he declared.

“The CII released guidance around transparency and customer communication during the pandemic, and we will continue to build on this guidance and promote our Transparency Companion to our Code of Ethics to help raise standards in claims handling going forward.”

BI claims data published by the FCA on October 4 shows that the industry has already made final payments worth over £1.2 billion, while interim/initial payments for unsettled claims stand at £296.9 million.

In terms of claims numbers per insurance provider, here’s the breakdown:

The FCA expects March 2023 to be the regulator’s final BI claims data collection and publication.