Commercial Court to test validity of Business Interruption insurance claims
This week the Financial Conduct Authority (FCA) provided further details of the test case it is about to bring in the Commercial Court concerning Business Interruption (BI) insurance policy wording and coverage.
Arguments over BI coverage (or the lack of) have been widespread since the outbreak of the coronavirus pandemic, which has seen an across the board shutdown of many business sectors in the UK. Thousands of businesses now have severe cash flow problems. Many have already entered into formal insolvency arrangements. The retail, travel and leisure industries have been particularly hard hit with little to suggest that their positions will improve anytime soon.
Clarke Willmott is handling a number of high value claims against several of the insurers targeted by the FCA’s legal action. We welcome and strongly support the FCA’s move on behalf of our clients and will be watching matters closely.
The FCA will issue legal proceedings against the insurers on or around 9 June 2020 in the Commercial Court. Judgment is expected to be handed down in early August 2020.
Christopher Woolard, Interim Chief Executive at the FCA said:
“The court action we are taking is aimed at providing clarity and certainty for everyone involved in these BI disputes, policyholder and insurer alike. We feel it is also the quickest route to this clarity and by covering multiple policies and insurers, it will also be of most use across the market. The identification of a representative sample of policies and the agreement of insurers who underwrite them to participate in these proceedings is a major step forward in progressing the matter to court.”
The following insurers will have their policy wordings examined by the Commercial Court.
- Allianz Insurance plc
- American International Group UK Limited
- Arch Insurance (UK) Limited
- Argenta Syndicate Management Limited
- Aspen Insurance UK Limited
- Aviva Insurance Limited
- Axa Insurance UK plc
- Chubb European Group SE
- Ecclesiastical Insurance Office plc
- Hiscox Insurance Company Limited
- Liberty Mutual Insurance Europe SE
- MS Amlin Underwriting Limited
- Protector Insurance UK
- QBE UK Limited
- Royal & Sun Alliance Insurance plc
- Zurich Insurance plc
Policyholders should not assume that inclusion of their policy wording in this case will mean their policies are responsive. The FCA is simply seeking a judgment that will help policyholders and insurers have a much clearer view of which BI policies respond to the COVID-19 pandemic, and those that don’t.
Although the FCA’s court proceedings will not be decided for at least another two months, the Commercial Court’s ruling is expected to supply much wanted guidance to both insureds and insurers alike concerning policy coverage.