• Ben Morgan

COVID-19 Business Interuption Update

Updated: 4 days ago

Currently the FCA are seeking legal clarity on Business Interruption (BI) insurance, as the Coronavirus has resulted in many businesses suffering financial loss and closures. There has been concern about the lack of clarity and certainty for customers who are trying to make a claim. Variation on types of cover and policy wordings used have made it difficult for customers to determine whether or not they have a valid claim.


To try and reduce this uncertainty, the FCA have sought court declarations as part of a test case to try and resolve the uncertainty around BI claims.


What is a test case and what will it do?


The purpose of the test case will be legally binding on the insurers in respect of the interpretation of the policy wordings reviewed in court. This will also provide persuasive guidance for policy wordings and claims, that can be taken into account in other future court cases.


In the last two weeks of July, the trial of the test case took place over eight days in the High Court.


Submissions were made by the FCA, the intervenors Hospitality Insurance Group Action and Hiscox Action Group, and the eight Defendants who had agreed to be part of the test case:

  • Arch Insurance (UK) Ltd

  • Argenta Syndicate Management Ltd

  • Ecclesiastical Insurance Office Plc

  • MS Amlin Underwriting Ltd

  • Hiscox Insurance Company Ltd

  • QBE UK Ltd

  • Royal & Sun Alliance Insurance Plc

  • Zurich Insurance Plc

The exact dates of judgement are not yet known, however Lord Justice Flaux expressed a hope that judgment would be available by the middle of September, although he made clear that this was not a binding indication.


When the FCA initiated the test case they developed a Policy Holder Engagement Statement for policy holders, which set out the FCA's approach to the test case for BI insurance policies. The key points are below:

  • The FCA will put forward the policyholders' claim to their best advantage.

  • The intended action will not prevent policyholders from pursuing issues through negotiated settlement, arbitration, court proceedings as a private party, or taking eligible complaints to the Financial Ombudsman Service.

  • Information provided by the policyholder will be strictly confidential and covered by the FCA litigation privilege.

  • The FCA will consult with the policyholder and intermediaries in key parts of the case.

We will continue to update our blog as and when we know further information about this matter.


UPDATE 9th September 2020


The court has stated that judgment will be handed down at 10:30am on Tuesday 15 September 2020.


UPDATE 16th September 2020


The FCA have published a judgement in the test case which has been handed down by the High Court. The judgement is very complex and runs over 150 pages long.


Whats next for policyholders?


Every policyholder who has made a complaint or claim that may have been affected by the test case will receive an update from their insurer within 7 days.


In the meantime this does not stop policyholders from making or settling claims against their BI insurance. Policyholders are also able to make a complaint to their insurer if they are not happy with the outcome, and refer the complaint the The Financial Ombudsman Service.


If you have already made a complaint to the Financial Ombudsman Service and your claim may have been affected by the test case, then you should wait for further information from the Ombudsman.


Invitation to speak with a legal team.


The FCA are has set aside time with their legal team from 21st September to 22nd September to speak directly with policyholders and give legal advice based on their claim.


The FCA will also consider meeting requests made to them by 5PM on Thursday 17th Septemeber.


In order to be considered for a meeting you must email biinsurancetestcase@fca.org.uk stating only the word 'meeting' in the subject line of the email, stating your availability in the body of the email. If you would like to discuss a particular policy then you must attach a copy of your policy documents a long with any correspondence with your insurer.


*information obtained from www.fca.org.uk*




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