UK Politics

Insurance stocks in the firing line as FCA business interruption ruling looms

130Views

Insurers could face a bill of up to £18bn if a case testing the validity of business interruption insurance goes against providers.

UBS reckons 37,000 policies could be affected by an action being led by the Financial Conduct Authority around the wording of these contracts with regard to the impact of the pandemic.

A ruling by the High Court is expected by the middle of September.

If the insurers lose on all policy wordings, then the liabilities, estimated by UBS at £30-£50,000 per policy, would result in what the bank calls a “negative delta” of £11bn-£18bn.

To put this into context, total insurance claims in the first half were £19bn.

A win for the insurers on all points would likely result in a 5-10% price rise for RSA Insurance Group PLC (LON:RSA) and a “10%-plus” increase in value for Hiscox Ltd (LON:HSX), the two general insurance stocks covered by UBS.

Of course, the story probably wont end at the High Court, with the losing party likely to appeal.

In May, the FCA turned to the courtsRead More – Source