Insurers have been making deductions to account for Government support during the lockdown, such as the small business grants of £10,000; the hospitality business grants of £25,000; as well as the furlough scheme. The ABI contest that these deductions are being made in order to avoid “double-compensating the claimant”. However, the Night Time Industries Association challenge that this is effectively “using the public purse to reduce their payments on claims”.
The FCA have called for insurers to handle and assess BI claims promptly and fairly where they have accepted liability.
In treating customers fairly, insurers must assess the appropriateness of making deductions. Assessments should be made on a case by case basis and should consider:
- the type and nature of the Government support
- how the policyholder used this support; and,
- the type of policy and its precise terms, including any set methodology for calculating the value of a claim set out under the relevant section of the policy.
The FCA have emphasised that, although it may be appropriate to deduct certain amount, “a single, uniform approach to deductions is still unlikely to be appropriate”. Insurer’s are also expected to reflect these matters appropriately in their communications with policyholders when making and agreeing settlement offers.
The FCA have warned that they may intervene and take further action if firms do not meet their expectations in treating customers fairly.
