Business insurance – FCA test cases

UPDATE: The FCA test cases have now commenced and can be followed live by clicking here.

You can also read the transcripts from previous days on the FCA’s website

There has been a lot of media attention surrounding the way insurance companies have responded to business interruption insurance claims which have arisen as a result of the coronavirus, as only a small minority of claims have been accepted.

While most policy wordings are explicit in their lack of cover for this type of global pandemic, the Financial Conduct Authority (FCA) accepts that there are genuine doubts over the interpretation of some wordings. They have identified a ‘representative sample’ of policy wordings to submit as test cases to the High Court.

During the test cases, the FCA will act as a policyholder and the various insurers will represent themselves. The outcome of the test cases will only be legally binding for the parties involved. However, the judgements made will provide persuasive guidance for the interpretation of similar policy wordings and hopefully avoid countless, repeated, court cases by different plaintiffs and insurers.

The eight day court hearing is scheduled between 20-23 July and 27-30 July. We expect the FCA will publish judgements as quickly as possible, but they are subject to appeal.

Following final resolution of the test cases (including any appeals), insurers should apply the judgment in (re-)assessing all outstanding or rejected claims (except complaints already referred to the Financial Ombudsman Service (FOS)). The legal precedence can be taken into account by other courts, the FOS and by the FCA.

We have been monitoring developments and will be contacting customers who we feel will be positively impacted by the test case outcomes.

Full information about the test cases can be found at https://www.fca.org.uk/firms/business-interruption-insurance#latest-updates