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FCA Test Case on Business Interruption Cover for COVID 19 Claims


On the 1st May, the Financial Conduct Authority (FCA), a UK financial regulator, announced that it would commence court proceedings to test how certain business interruption insurance policies respond to claims arising from COVID 19.

The purpose of the court proceedings is to provide clarity in relation to how certain business interruption policies should be interpreted and whether they cover losses arising from the COVID 19 pandemic. Acting in the public interest, the FCA will seek to put forward policyholders’ arguments to their best advantage.

What is the timetable?

The FCA have identified a sample of 17 policy wordings that capture some of the key contractual and ‘causation’ issues that could be in dispute. They have also asked all insurers to check their policy wordings against the 17 identified to see if theirs will be impacted by the outcome of the case.

The test case is aiming to reach judgement relatively quickly, with judgement expected after an 8-day trial, which is scheduled to conclude at the end of July. Depending on the outcome of the case, either the FCA or the insurers involved in the test case may appeal. If this happens, this appeal may in the interests of time be expedited to the Supreme Court.

What might the implications of the decisions be?

The result of the test case will be legally binding on the insurers that are parties to the test case in relation to the sample of policy wordings considered by the court.

However, in addition, the FCA have advised that the court’s decisions will also provide persuasive guidance for the interpretation of similar business interruption policy wordings and claims.

Where can I get more information?

Willis Towers Watson will continue to track developments in order to be able to support our clients. Please do not hesitate to contact your account manager should you have any questions that you would like to discuss.

Alternatively, should you wish to find out more about the case in the meantime, please visit the FCA’s business interruption hub for more information: https://www.fca.org.uk/firms/business-interruption-insurance.

You can also subscribe to email updates from the FCA on business interruption and the test case by following this link: https://www.fca.org.uk/sign-business-interruption-bi-insurance-email-updates.

Your usual account team are on hand to answer any queries you may have.