The Chartered Insurance Institute (CII) has called on the UK government and insurance industry to take action to avoid future legal disputes. The move came as the High Court delivered its judgment in a test case aimed at resolving coverage disputes related to Covid-19 business interruption losses.
The CII, the professional body
for insurers and brokers, wants the government and insurance industry to
improve product governance and advice, as well as clarify cover for
pandemic-related risks.
With regards to product
governance processes and advice, the CII said there needs to be greater clarity
on product wordings, while advice given to customers on insurable and
non-insurable risks needs to be improved. “Where the same words and phrases are
used in different contracts, there should be a consensus among professionals
about what those terms mean, so that consumers can be reassured that two
policies that look the same on paper cover the same risks,” it said.
The CII also said the
government should establish an approach to pandemics and other systemic risks
that clearly sets out the scope of state intervention. “If the government
clarifies the risks it is prepared to cover, the market can be clear on how it
will cover the risks that it is capable of covering,” it said.
The CII’s key concern is the
issue of “trust” in the profession, said Sian Fisher, CEO of the CII. “For this
reason, we welcomed the test case when it was launched, as it will create
greater certainly around the legal basis of business interruption contracts.
Although the High Court decision will bring greater certainty to the situation,
we must bear in mind that this decision may be subject to appeal,” she said.
“Looking to the future,
insurers, brokers and government must act now to reduce the need for court
cases such as this one in future,” said Ms Fisher.
CRE
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