Supreme Court judgment in Financial Conduct Authority’s (FCA) business interruption insurance test case means many policy holders will receive payment
The Supreme Court has substantially allowed the FCA’s appeal on behalf of business interruption insurance policyholders. The legal process for impacted policies is now complete and means that covered policyholders will now have their claims for coronavirus-related business interruption losses paid. The judgment is legally binding on the eight insurers that agreed to be parties to the test case. Those insurers are:
- 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 judgment also provides authoritative guidance for the interpretation of similar policy wordings and claims. The FCA has said it will be working with insurers to ensure that they move quickly to pay claims that the judgment says should be paid, making interim payments wherever possible. The judgment does not determine how much is payable under individual policies, but provides much of the basis for doing so. Each policy needs to be considered against the detailed judgment to work out what it means for that policy. Policyholders with affected claims can expect to hear from their insurer soon. Policyholders with questions should approach their broker, other advisers or insurer. 370,000 policyholders were identified as holding 700 types of policies issued by 60 insurers that may be affected by the outcome of the test case.
The FCA has published draft guidance for policyholders on how to prove the presence of coronavirus, which is a condition in certain types of policy. The FCA will issue finalised guidance as soon as possible after the consultation which closes on 22 January. They will also publish a set of Q&As for policyholders to assist them and their advisers in understanding the test case. The FCA will also publish a list of BI policy types that potentially respond to the pandemic based on data that they will be gathering from insurers.
Read more on the FCA website.
Photo credit: Lucas Favre