Aston Lark boss gives predictions of FCA BI test case result

As the verdict for the FCA business interruption test case approaches, Aston Lark group chief executive Peter Blanc says insurers could have to make claims payments.

“I can comfortably predict what the end result of the court case will be – insurers will probably have to make some payments, claimants will still feel that they were owed more, and insurers and insurance brokers will be seen as having sought to avoid responsibilities,” he told Insurance Times.

“Further litigation and appeals seem inevitable as so many different wordings are being tested at once. This is certainly not reputation enhancing. Going forward, a well-defined and explained mechanism for solving societal risks would help to prevent another unseemly battle.” 

Logical solution

Blanc suggests that a pool model able to provide immediate relief to businesses up to a relatively modest level and followed up by government support in the event of a prolonged problem would seem a logical solution.

“Insurers have effective supply chains for delivering claims monies, and the insurance market is experienced in managing surge events while also minimising associated fraud,” he said. “It would be a real shame if the UK simply got over Covid-19 and didn’t grasp the nettle to ensure that we have resilience for the future built in – and not just for pandemics.

”A proper look is needed at the UK risk register to ensure that we’re prepared for the very predictable problems of the future.”

Blanc also cited the launch of a Covid-19 Support Fund over £80m for good causes as an example of the good that could come out of the pandemic.

A bright side

The FCA court case was a necessary tool to bring clarity to a really difficult situation, Blanc said, but he argued that the actual process itself served to highlight that litigation is a messy, unseemly affair.

Speaking about whether there is a bright side to all of this, Blanc said: “It is fair to say that the overwhelming majority of the population have absolutely no interest in this matter. It directly concerns thousands of businesses, but not hundreds of thousands. I suspect that the majority of those businesses have already moved on, accepting (grudgingly) that pandemics were never intended to be covered.”

The group chief executive said that since the beginning of the pandemic he has been increasingly asked how companies can protect themselves moving forward, but he warned that the insurance industry has yet to come up with answers.

“The solutions for businesses have to be joined up with government as the fact remains that insurance as a concept doesn’t work for problems facing all policyholders simultaneously,” he said. ”The profession should and could, however, build a framework, with a government back stop, to improve the efficiency of delivery of State aid should Covid-19 or similar, rear its ugly head in the future.”

Read more…The Big Question September 2020: Will insurers come out looking better or worse to the FCA test case? Why?

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