After many BI policyholders filed High Court claims against a number of insurers (and the trial has since concluded and is awaiting conclusion), the Financial Conduct Authority (FCA) has asserted that it expects insurance firms to consider each case individually, as ‘a single, uniform approach to deductions is unlikely to be appropriate’.
The FCA’s warning comes after some insurers have been reported to be making deductions for some types of government support that policyholders have received over the past few months, even after agreeing liability, when calculating non-BI claim payments.
“Some of these factors will be case- and claim-specific. Even where it is appropriate in principle to deduct these amounts, a single, uniform approach to deductions is still unlikely to be appropriate,” the FCA said. “Insurers are likely to need to consider individually the precise details of the policy, the claim, and the use and application of the government support the policyholder received.
“We expect firms to take these matters into account when they calculate non-damage BI claims. We also expect them to reflect these matters appropriately in their communications with policyholders when making settlement offers and reaching settlement on relevant BI claims.
The FCA added that it will consider how firms treat their policyholders in this way as part of its ‘usual supervisory activities’. “We may intervene and take further actions where firms do not appear to be meeting our expectations and treating their customers fairly on these points,” it warned.