The professional body says that building trust across the industry is a ‘key concern’
The Chartered Insurance Institute (CII) is urging insurance professionals to liaise with the government to create an “approach to pandemics and other systemic risks” to ensure that legal proceedings, such as the FCA’s test case into business interruption (BI) policy wordings, will not be necessary in future.
The CII is asking the insurance sector to focus on three key areas moving forward in order to mitigate potential future legal action. This includes:
- “Product governance processes, including gaining greater clarity on product wordings. 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.
- “Improve advice processes and non-advised buying processes to help clients understand both the insurable and non-insurable risks they face and what they can do about each one.
- “Establish an approach to pandemics and other systemic risks that clearly sets out the scope of government 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.”
For CII chief executive Sian Fisher, a primary concern here is around building consumer trust in the industry.
She said: “As the professional body for insurance, our key concern is to build trust in the profession. 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.
“Business interruption insurance is a crucial product for many SMEs. It provides for a wide range of risks that could threaten the survival of a business, including fire and flood.
“Looking to the future, insurers, brokers and government must act now to reduce the need for court cases such as this one in future.”