Business interruption insurance test case – Insurer claims data

Download the data (Excel)[2]

Please see the fifteenth tab for data published on the 31 March 2023 and other tabs for previous submissions. 6 months have elapsed since our previous publication.

Background

We sent a Dear CEO letter[3] to insurers affected by the business interruption insurance Test Case. The letter explained that we intended to gather information on all non-damage BI policies that are, in principle, capable of responding to the coronavirus (Covid-19) pandemic. We published an updated list of non-damage business interruption policies[4] on 27 May 2021 that are, in principle, capable of responding to the Covid-19 pandemic in at least some circumstances, as submitted by insurers. The letter also set out our intention to gather information from all affected insurers regularly on the progress of their non-damage BI claims, and to publish some of this data.

In March 2023 insurers submitted what we expect to be the final iteration of data that will be collected and published on progress of on-damage BI claims. The FCA has been closely monitoring affected firms’ handling of BI claims since we began collecting this data in March 2021. 

We acknowledge that firms received an unprecedented volume of BI claims and recognise the work undertaken by all parties to progress these claims to full and final settlement. As stated in our September 2022 publication Claims handling lessons learned from business interruption insurance[5], firms must handle claims promptly and fairly, treat customers fairly and act in their best interests in accordance with our rules ICOBS 8.1.1R[6] and PRIN 2.1.1R[7]. We expect firms to continue to adhere to our rules and principles when handling their remaining BI claims and, more generally, in their claims handling across all product lines.

What the data includes

Insurers have submitted their data on their progress with BI claims. We have decided to publish, at an individual firm level, the number of:

• BI claims where the insurer has received all the information required to enable them to calculate the total value of the claim
• BI claims for Covid-19 related loss that have been accepted
• BI claims where the insurer’s decision as to whether there is a valid claim is pending
• unsettled BI claims where an interim/initial payment has been made to the policyholder or their representative
• BI claims where an offer of final settlement has been made, accepted by the policyholder, and paid in full

A number of firms have provided nil returns. Our request only included policies:

• which are, in principle, capable of responding to the COVID-19 pandemic
• which do not represent contracts of large risk
• where more than 5 claims have been made

This means those insurers with a ‘nil return’ did respond to the FCA’s request, but don’t have any policies within the scope of the data request.

The information reported is as submitted to us and reflects the firms’ records of the numbers of claims meeting the criteria specified in our information request, and of the values of interim/initial payments and final settlements made as reported to us on 6 March 2023.

Some inconsistencies may exist between how insurers have reported their figures. We will continue to work with relevant insurers to ensure consistency in future reporting.

What the data shows

• The number of BI claims where the insurer's decision as to whether there is a valid claim is pending is 341 (5 September 2022: 665).
• The aggregate value of the interim/initial payments made for the 1,074 (5 September 2022: 1,560) unsettled claims where such payments have been made is £294,949,957 (5 September 2022: £296,880,011).
• The aggregate value of the payments made for the 36,904 (5 September 2022: 34,506) claims where final settlements have been agreed and paid (see data note below) is £1,406,662,310 (5 September 2022: £1,213,945,175).
• This means that (at the point of this information submission) 37,978 (5 September 2022: 36,066) BI policyholders out of the 43,027 (5 September 2022: 42,586) who had had claims accepted, had received at least an interim payment.

The claims numbers reported as those where the insurer has received all the information needed to calculate the total value of the claim reflect the insurer’s view. We remind firms of the need to handle claims promptly and fairly and to provide reasonable guidance to help a policyholder to make a claim.

Any BI policyholders who believe they may have a claim but have not yet submitted this to their insurer should do so as soon as possible in accordance with the policy document. Policyholders may also find it useful to refer to our policy checker[8] and our guidance and statements for policyholders[9] for more information.

Data note

Our data includes an aggregate total value of payments made where final settlements have been agreed and paid. In May 2021 we clarified and reiterated to insurers that final settlement figures should exclude interim payments made on unsettled claims.

A small number of firms informed us that they had been reporting incorrectly. As a result, we estimate that our reported figure of £433,125,666 (May 2021) for payments made where final settlements have been agreed and paid may have been overstated by up to 10%. Impacted firms have corrected their reporting going forward as of their June submission. We have not asked firms to resubmit their historic positions so care should be taken when comparing historic settlement figures.

Future data

There are no further scheduled publications for BI claims data.