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Maintaining public trust during a crisis

News article

Publication date:

06 May 2020

Last updated:

09 June 2020


Policy and Public Affairs

With insurance products and claims coming under greater scrutiny due to the effects of COVID-19, we examine how the sector is responding.

The FCA’s decision to test the wording of certain business interruption contracts in court is preferable to a disorderly and potentially lengthy series of test cases that are less likely to reach a comprehensive and definitive solution.

This could help reduce uncertainly for both insurers and the public. The process which the FCA will use to select test cases will be very important, and it is hoped that the FCA will consult widely with both consumer groups and the insurance sector to maximise the chances of reaching a decision that is fair, comprehensive and definitive.

The key controversy around COVID-19 and insurance has been around the scope of business interruption insurance, with many customers disappointed that their cover did not give them more protection from the massive economic impact of the virus. This kind of controversy is not new. We have seen similar gaps between expectations and reality with cyber insurance and before that, with different forms of liability insurance.

Given the limits to which customers can bring themselves to focus on the finer points of their insurance policies, it is not credible for us, as a profession, to tackle the problem through policy literature alone. We need to start by thinking about all the risks our clients face, not just the insurable risks. For example, one leading broker has adopted this new approach simply by rethinking is annual meetings with corporate clients. It had always put renewal of cover at the top of the agenda, and uninsured risks at the bottom. It has now switched this around, talking about uninsured risks first, along with how clients plan to manage these risks, and renewal of cover at the end. This means clients come out of the meeting with a much greater understanding of the risks they face and the part insurance plays in managing those risks. It gives clients the ability to understand the limitations of their cover without feeling cheated later on.

The insurance sector should also use this as an opportunity to demonstrate that its ability to pay claims quickly is better than most people think. At such a crucial time, insurers can focus on building trust in the profession by delivering the clear, accurate and timely processes that the FCA is looking for. The FCA’s recent approach to business interruption insurance was also set out in their Dear CEO letter, including its decision not to intervene where policies do not cover pandemics.

When life begins to return to some form of normality, this lesson – about looking at the whole customer and prioritising their biggest and most difficult risks – is one the insurance profession must not forget.

This document is believed to be accurate but is not intended as a basis of knowledge upon which advice can be given. Neither the author (personal or corporate), Society of Claims Professionals or Chartered Insurance Institute, or any of the officers or employees of those organisations accept any responsibility for any loss occasioned to any person acting or refraining from action as a result of the data or opinions included in this material. Opinions expressed are those of the author or authors and not necessarily those of the Society or Chartered Insurance Institute.


  • Mr Anthony Hall
  • 27 May 2020 09:14AM

I would have thought that this article would have engendered a lot of interest and comment, but I seem to be the only one who has reacted and yet I retired in 1998. What has happened to the profession of which I was so proud to be a member?

  • Mr Anthony Hall
  • 12 May 2020 09:51AM

Moving on to claims. It is important for a client to present the claim in a form which will bring about a swift and satisfactory outcome. This was largely taken away by insurers wanting direct reporting but not giving advice on presentation. As a broker I would help the client formulate the claim, explaining why things should be and not be included, and then to present the claim in a format, with documentation , familiar and acceptable to the insurer. That has mostly gone now and the client is at the 'mercy" of the claims handler who is employed by the insurer to whom the first duty calls. Loss Adjusters were treated with suspicion by clients as they were paid by the insurer and it was perceived that there was a conflict of interest. I would act as the 'middle man' to ensure both parties understood each other. I remember well one case where the offer for business interruption was increased ten-fold after I recommended the employment of a Loss Assessor - do insurers make this suggestion in the event of a dispute? The demise of the independent broker leaves whole swathes of the country without access to face-to-face informed and professional advice and that is a disgrace, solely caused by the current regulatory regime.

  • Mr Anthony Hall
  • 11 May 2020 02:32PM

What I find so disappointing about this is that this is exactly what I was trained to do and practiced over many years of my broking life. My commercial clients would all have been visited and I would take a tour with them pointing out the relevance of policy restrictions etc and what they could do to help themselves. I would read company accounts and view or advise on plant registers etc - that is what a broker should do - but the industry has failed to protect the independent broker and clients are persuaded (by cost alone) to go direct. The FCA has made life so difficult for independent brokers that there is now just a fraction of the numbers left than when I retired in 1998. Insurance is complicated and the general public cannot be expected to understand it and yet the profession has its hands tied by a regulatory system which is out of control. All of the professional bodies have failed to stand up to the FCA and this is the result - clients who go direct have no idea what they are covered for, just that it is cheaper, and that is so sad.