Most small businesses aren’t covered for coronavirus disruption
However, the watchdog told insurers they must assess and pay claims quickly to firms that do have the correct cover in place.
In a letter to insurance bosses, FCA chief executive Christopher Woolard said he wanted to ensure that financial pressures of small firms were not “exacerbated by slow payment” from cover.
Making part payments should be done on claims where it is unclear if a full payout is due.
Woolard added: “If you disagree with doing so, we would like you to send to us the grounds for reaching that decision including how you believe it represents a fair outcome for customers.”
He said policyholders may be disappointed where they do not have the correct cover, but added there was no “reasonable grounds” for the FCA to intervene.
Small business unit
It comes as the watchdog has created a new small business unit, which is jointly overseen by Jonathan Davidson, executive director of supervision – retail and authorisation, and Sheldon Mills, interim executive director of strategy and competition.
The purpose is to coordinate FCA activities across small business issues.
At the same time, Woolard wrote to banks and said there must be a senior manager clearly responsible and accountable for lending to small businesses.
He said: “Our objective will be to ensure that there is not a repeat of the well documented historic issues in the treatment of SMEs.”
Bruce Hepburn, CEO of commercial insurance procurement and dispute resolution firm Mactavish, said: “The impact of coronavirus on businesses is huge, and sadly most did not have insurance policies that covered pandemics so relatively few will be successful if they make a claim.
“However, with many businesses struggling insurers have a duty to make any legitimate settlements as quickly as possible, but to also respond to clients who have made claims to let them know the outcome and the reasons for this.
“Insurers should have their feet held to the fire over this and the only way of doing this would be to have a review process set up so that their actions can be monitored properly.”