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By Josh White
Date: Monday 01 Jun 2020
LONDON (ShareCast) - (Sharecast News) - Insurance firms including RSA and Hiscox responded to a statement from the Financial Conduct Authority (FCA) on Monday, over the regulator's business interruption insurance court proceedings, which were first announced on 1 May.
RSA noted that the FCA was looking to obtain court judgements, using the Financial Markets Test Case Scheme, on contractual interpretation of certain business interruption insurance policies in the UK market, bringing clarity for both customers and the industry.
The FTSE 100 company had updated the market on the impacts of the Covid-19 coronavirus crisis in its first quarter trading update on 7 May, reporting that as at the end of April, it had received valid claims across travel, UK wedding cancellation and commercial lines business interruption and related policies, with an estimated cost of around £25m, net of reinsurance.
That estimated cost had not changed materially since then, it said on Monday.
"The FCA confirmed today that they have selected a representative sample of 17 policy wordings to include within the court case as well as publishing a list of 16 insurers who underwrite these wordings," RSA's board said in its statement.
"In this context the FCA has invited a subset of eight insurers to assist with the court case, with RSA's participation being in relation to three of the schemes referenced."
It said the FCA had "made clear" in its statement that, in selecting policy wordings and insurers for the court case, they had sought "breadth of coverage" across the key arguable issues, while minimising the number of parties engaged before the court.
Market share was not a determining factor in selection, and RSA said its inclusion was not representative of its market share on the relevant policy wordings.
"The FCA expects the outcome of the court proceedings and related rulings to be directly relevant for all insurers providing business interruption insurance in the UK."
As the FCA said in its earlier announcements, it remained the case that the majority of business interruption claims were not expected to be eligible under their coverage terms for Covid-19, with the court proceedings seeking to address the legal interpretation of a small minority of policies and schemes.
RSA said it was continuing to treat claims in line with legal advice, precedent and case law.
"RSA has a comprehensive reinsurance programme, with core catastrophe covers in place across the group, including the UK, as well as a group-wide aggregate protection.
"These arrangements are expected to provide substantial protection in the event that downside claims scenarios were to arise."
Hiscox, meanwhile, said it recognised the "extremely difficult" conditions for businesses, explaining that it was seeking expedited resolution of any contract dispute.
It said it had agreed to assist the FCA by participating in the test case, in order to provide certainty for businesses and brokers on the application of policies as quickly as possible.
"As described in the company's first quarter trading statement on 5 May, Hiscox is actively settling claims for event cancellation and abandonment, media and entertainment and other segments including travel," the board said in its statement.
"There is no change to any of the estimates or guidance provided in that update, and the group's capital position remains robust."
At 0803 BST, shares in RSA Insurance Group were up 0.26% st 395.33p, while Hiscox was ahead 1.79% at 753.67p.
|52 Week High||582.80p|
|52 Week Low||326.90p|
Compare performance with the sector and the market.
|Time||Volume / Share Price|
|16:35||1,173,465 @ 450.30p|
|16:29||171 @ 450.50p|
|16:29||90 @ 450.40p|
|16:29||617 @ 450.40p|
|16:29||600 @ 450.30p|