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FCA Test Case on Business Interruption Cover for COVID 19 Claims


Updated on 17 September 2020

The High Court has now handed down its judgement in the Financial Conduct Authority’s (FCA)’s business interruption test case. The Court has found in favour of policyholders on the majority of the key issues arising out of the wordings considered in the representative sample.

Background

On the 1st May, the FCA 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 was to provide clarity in relation to how certain business interruption policies and wordings should be interpreted and whether they cover losses arising from the COVID 19 pandemic.

Court judgement

On 15 September, the High Court handed down its judgment. While different conclusions were reached in respect of each wording, the Court has found in favour of policyholders on the majority of the key issues arising out of the wordings considered in the representative sample.

It is widely expected (but yet to be confirmed) that aspects of the ruling may be appealed. If there is an appeal, it is expected that, in the interests of time, this will bypass the Court of Appeal and go straight to the Supreme Court.

The judgment is technical and complex, running to well over 100 pages, and deals with many nuanced issues. WTW is reviewing the judgment carefully to analyse what it means for clients.

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.

A statement from the FCA about the case outcome, together with summary of the key points of the decision can be found on the FCA’s website: https://www.fca.org.uk/news/press-releases/result-fca-business-interruption-test-case.

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.