The Financial Conduct Authority (FCA) has published finalised guidance for businesses to help them prove the presence of covid-19, following complaints from small to medium-sized enterprise policyholders, as well as MPs and other stakeholders, concerned that insurers were taking a narrow reading of business interruption policy wordings.

The FCA carried out supervisory work confirming that insurers were refusing the majority of these claims and, as a result, went to the High Court to obtain a declaration on what was covered by the policy wordings and achieve a clear and swift final outcome to enable policyholders to receive claim payments as soon as possible.

The document contains guidance on how to prove the presence of covid-19 in a particular area for the purpose of making a claim under an insurance contract that was in force during March 2020 in response to the pandemic.

It came into effect on March 3rd and will cease to have effect on January 31st 2022, which is when the FCA expects that all issues relating to the presence of coronavirus will have been resolved.

Research from the Association of British Insurers recently revealed that up to £2.5 billion is expected to be paid for covid-19 insurance claims incurred last year, with £2 billion for business interruption claims and £204 million paid for protection insurance claims, such as life, critical illness and income protection insurance. 

In addition, £152 million is expected to be paid out on travel insurance claims and £121 million is expected to be paid across other products, such as events, weddings and liability insurance.

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