High Court showdown set as FCA seeks clarity on whether pandemic should be covered by Business Interruption insurance

Time 11 months ago

A test case to decide on whether business interruption insurance claims should pay out to firms for the coronavirus pandemic is to be brought to the High Court by the Financial Conduct Authority.

The FCA is seeking to determine in the public interest a decision from the court as to whether some business interruption policies should pay out.

Some policies had wording in them that suggest businesses had cover and should have received a payout for the Covid-19 outbreak – but few firms have received cash.


Some business interruption insurance policies included cover for pandemics but still failed to pay out, with insurers claiming coronavirus was excluded.

Many business owners feel that is wrong and the FCA says it wants ‘clarity’.

It is seeking that via a sample of court cases where it will put forward the policyholders’ arguments in the public interest.

The FCA’s Christopher Woolard 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 FCA reviewed 500 relevant policies and identified 17 policy wordings that capture the ‘key issues’.

It hopes the judgment will help policyholders and insurers have a clearer view of which business interruption policies cover the pandemic and which do not.

‘Policyholders should not assume that simple inclusion of their policy wording in this case will mean their policies are responsive,’ added the FCA statement.

‘Over the last three weeks we, supported by external counsel, have thoroughly considered the information we received to enable us to decide which selection of policy wordings would be representative of the key issues in dispute between policyholders and insurers.

‘This process led to us deciding which insurers we should invite to participate in the High Court test case.’

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The following 16 insurers will be examined in the test case:

  • Allianz Insurance plc (part of Allianz SE)
  • American International Group UK Limited (part of American International Group, Inc.)
  • Arch Insurance (UK) Limited (part of Arch Capital Group Limited)
  • Argenta Syndicate Management Limited (part of Hannover Re)
  • Aspen Insurance UK Limited (part of Aspen Insurance Holdings Limited)
  • Aviva Insurance Limited (part of Aviva plc)
  • Axa Insurance UK plc (part of AXA SA)
  • Chubb European Group SE (part of Chubb Limited)
  • Ecclesiastical Insurance Office plc
  • Hiscox Insurance Company Limited (part of Hiscox Limited)
  • Liberty Mutual Insurance Europe SE (part of Liberty Mutual Group)
  • MS Amlin Underwriting Limited (part of MS&AD Insurance Group Holdings, Inc.)
  • Protector Insurance UK (part of Protector Forsikring ASA)
  • QBE UK Ltd (part of QBE Insurance Group Limited)
  • Royal & Sun Alliance Insurance plc (part of RSA Insurance Group plc)
  • Zurich Insurance plc (part of Zurich Insurance Group Limited)

The FCA will file the claim on June 9 and it expects a five-to-10-day court hearing will take place in the second half of July.

Will my insurance cover my business during coronavirus?

James Baggott

James is the founder and editor-in-chief of Car Dealer Magazine, and CEO of parent company Baize Group. James has been a motoring journalist for more than 20 years writing about cars and the car industry.

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