Written by Ebony Ezekwesili
On 2 November 2020, the Supreme Court granted permission to appeal in the Financial Conduct Authority’s test case on business interruption insurance relating to the coronavirus pandemic lockdown. The hearing will begin on 16 November 2020 and is expected to last four days.
The FCA launched the test case to determine whether a representative sample of eight insurance companies with various policy wordings covering business interruption would have to pay out claims to businesses that were forced to close as a result of the COVID-19 lockdown in March. The High Court analysed three types of policy wordings, primarily “in the event of a notifiable disease within a specified radius”, “when insured premises cannot be accessed because of public authority restrictions”, and a combination of the two.
Six insurers and a policyholder action group have joined the FCA in appealing the judgment handed down by the High Court on 15 September 2020, which mostly ruled in favour of the policyholders. The appeal seeks to clarify whether the policy wordings cover the business interruption caused by the first lockdown in March. A decision is likely to impact hundreds of types of policies, 60 insurers, and 370,000 policyholders, resulting in billions in claims.