The trade association’s director general accepts ‘that reputationally this has been a very difficult few months for the industry’ in light of the FCA’s test case against insurers around the clarity of business interruption policy wordings

The ABI’s director general Huw Evans tells Insurance Times that the positive work done by insurers throughout the Covid-19 pandemic has been overshadowed by the industry’s reputational slaughter around business interruption (BI) claims and the corresponding FCA test case to clarify policy wordings and intentions.

“It’s inevitably the case that when you have both a large insured event and a large uninsured event happening at the same time that the headlines focus on the unhappy customers rather than the happy customers,” Evans says.

“We have to accept that dynamic, but we do have to then tell the other side of the story.

”So, yes, I accept that reputationally this has been a very difficult few months for the industry. No industry wants unhappy customers, and we’ve got some, so of course that makes for a difficult moment.

”But I do think this industry has a very good story to tell and it’s important that we tell it and that the insurers themselves and their representatives and brokers tell it so that we can maintain as much consumer confidence as possible.”

It seems an apt time then for the ABI to publish its ‘Helping customers, citizens and charities: Insurers’ response to the Covid-19 crisis’ report, which came out in July.

This document outlines how the insurance sector had responded to the coronavirus pandemic, for example with the creation of the sector’s Covid-19 Support Fund, which currently totals £83.9m, as well as the raft of customer commitments that insurers are adhering to in order to support policyholders struck by the impacts of the crisis.

Despite this “good story”, Evans still does not think that the nationwide negative perception of the insurance industry “can be flipped entirely”, however there are some steps insurers and brokers can take to boost the sector’s struggling reputation.

Primarily, this lies in “settling claims, where claims are eligible, as quickly as possible and with minimum fuss” and ensuring “that customers get a great customer experience at the moment, even more than ever”.

Alongside this, Evans adds that both insurers and brokers should work “to remind customers about the day-to-day perils that they are more likely to face, for which they should be insured” rather than focusing solely on the pandemic.

This includes, for example, fires, floods and motor accidents for individuals or businesses.

“These are still the most common risks that you face and are most likely to claim on. Those haven’t really gone away,” Evans emphasises.

“[It is] partly about reminding people that pandemics have never been covered by insurance, but these other things are far more likely to happen to you, far more likely to disrupt your life and you have to make sure you’re covered.”

Evans adds that the insurance industry pays out nearly £50bn a year in general insurance claims for businesses and individuals.

Evans also thinks that the industry has “to do more to appeal to customers” and improve policyholders’ level of understanding around the insurance products that they buy.

This, in turn, will decrease the stigma associated with the sector because customers will better understand what risks are included within their premium payments.

Evans explains: “We as an industry have to do more to appeal to customers and to make sure that the products that we are selling, they understand. And that is a responsibility we all have.

“We have to look at how we label products, how we describe them and make sure that there is no room for confusion about what’s covered and what’s not.

”Because I think most customers understand that you pay a certain amount of money and that does cover you for a certain amount of risk. It doesn’t cover you for everything, it covers you for a certain amount.

“It’s really important as an industry [that we] get better, better than we traditionally have been at being able to have that conversation with customers and tell that story.”


Central to the ongoing debate around BI policy wordings is the FCA’s test case, which was heard at the High Court at the end of July.

Although an appeals process has already been agreed between the FCA and the eight participating insurers, Evans confirms that even following a potential appeal once the verdict is released mid-September, the test case will still provide “as quick a means as possible through the legal process to get clarity around wordings”.

“We’re talking months not years,” he says. “That is unprecedented speed. Even if there is an appeal process that lasts several months, that will still be much, much quicker, significantly quicker than anything any party could have achieved otherwise. Commercial litigation disputes over insurance can typically take many, many years.”

It was even a quick turnaround to organise the eight-day hearing, Evans adds, considering that the FCA announced its intention to seek legal clarity in April and the case was presented a few short months later in July.

Despite this emphasis on the test case and the now nail-biting wait for the judges’ initial verdict, Evans does not think this will be the silver bullet that solves all the questions surrounding Covid-19-related BI claims.

He says: “It’s not a boxing match where one side wins and one side loses. There are eight different insurers, they are all represented individually by their own QCs, fighting for their own wordings.

”So, the court will be adjudicating on each wording, not on the wordings as a block, so there’s certainly potential for the court to agree with some and not with others. Mathematically, that would seem more likely than agreeing entirely with one side or entirely with another.

“I think that there will continue to be ongoing challenges around business interruption for some time to come.

”The court case is an important step forward, but it doesn’t resolve everything and there are a lot of other wordings involved here that are potentially impacted by the court ruling, depending on where the court ruling comes out.

”The insurers affected by those will have to get their own legal advice about what impact that has and so on.

“This isn’t a simple one and done process [but] it’s an important way of speeding up some elements of the legal clarity that are needed to be able to settle some of these disputes.”