News: QBE UPDATE 1-UK watchdog goes to court to clarify coronavirus business insurance

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Britain's financial watchdog said it would urgently ask the courts to clarify uncertainty over whether businesses can claim compensation for disruption caused by the coronavirus pandemic.

A national lockdown to fight the pandemic has forced many companies to temporarily suspend operations and furlough staff.

"We have been clear that we believe in the majority of cases business interruption insurance was not purchased to, and is unlikely to, cover the current emergency," Financial Conduct Authority interim chief executive Christopher Woolard said in a statement on Friday.

"However, there remain a number of policies where it is clear that the firm has an obligation to pay out."

The FCA is seeking a declaration from the court to resolve a "selected number of key issues causing uncertainty as promptly as possible" and provide greater clarity for insurers and their customers.

The watchdog said court action would not determine how much is payable under individual policies, but will provide the basis for doing so.

Lloyd's of London insurer Hiscox is HSX.L among firms that have come under pressure from small businesses to pay out for business interruption, along with FTSE 100 insurer RSA RSA.L and Australian firm QBE (QBE) .

The insurers did not immediately respond to comment on Friday. They have previously said they seek to pay valid claims quickly.

The FCA also set out measures to support consumers and businesses who hold insurance products and who are facing other issues as a result of coronavirus.

The package sets out the watchdog's expectations that insurers should consider whether their products still offer value to customers in the pandemic and whether they can be doing more for those suffering a financial impact because of coronavirus, the FCA said.

The watchdog said that insurers should grant premium payment holidays to customers, if requested, for a rolling period of up to three months. The measures come into effect on May 13.