Anna Sweeney, the Bank of England’s (BoE) executive director for insurance, has said that business interruption (BI) related to the COVID-19 pandemic claims remain a serious concern for the UK insurance and reinsurance industries.
Her comments come as the Financial Conduct Authority (FCA) prepares to seek legal clarity on whether existing BI policies have any obligation to pay out.
“The highest level of uncertainty remains around business interruption,” Sweeney told a City & Financial online event.
According to Reuters, the BoE director added that the sector has remained robust face of the COVID-19 pandemic’s impact on assets it holds and on liabilities.
The FCA has already identified a sample of BI policy wordings that are representative of the key arguable issues, and plans to obtain a court declaration on the matter this month.
“A number of insurers are taking steps to make sure there is no ambiguity about who is and isn’t covered for a second wave,” Sweeney noted.
The policies identified by the FCA belong to eight insurers, who have been invited to participate in the court process.
“We would expect both sides to abide by the outcome,” said Bronek Masojada, Chief Executive at Hiscox, which is among the group of insurers.
He also noted that reinsurers will likely exclude all communicable disease cover from their policies by the January 2021 renewals.
Association of British Insurers Director General Huw Evans added that the industry would be undertaking a “wholesale review of wordings” as a result of the disputes.