Business Interruption — FCA Test Case

Greater clarity for policyholders suffering business interruption losses due to Covid-19 — the FCA test case

On 1 May 2020 the Financial Conduct Authority (FCA), as conduct regulator of insurers in the United Kingdom, announced its intention to bring a test case seeking legal clarity on coverage for Covid-19 claims made in respect of business interruption (BI) insurance policies that are not linked to property damage (FCA link here). The FCA updated the market on 1 June 2020 on the progress of the court action (FCA link here).

In the intervening period, the FCA considered over 1,200 submissions from policyholders who were in dispute with their insurers over the terms of their BI policies, and from 56 insurers as to how they proposed to handle more than 500 claims.

The FCA’s recent update includes drafts of:

• proposed assumed facts for the test case;
• proposed representative samples of policy wordings that the judge hearing the test case will be asked to consider;
• proposed questions for determination by the court; and
• guidance setting out the FCA's expectations for insurers and brokers when handling claims, or complaints, relating to business interruption policies between now and the date of the judgment in the test case.

To read our full Client Alert on the FCA test case, click here.