Covid-19: Business Interruption FCA test case



10 June 2020

Updated: 15/01/21

Given the complexities surrounding business interruption policy wordings and the number of disputes between policyholders and Insurers as to the interpretation of these wordings and whether losses should be covered, the UK’s financial services regulator, the Financial Conduct Authority (FCA) recognised the need for it to intervene in order to assist in swiftly solving some of the uncertainties surrounding such policy wordings and the associated on-going claims and disputes. It therefore proceeded with seeking a court declaration as part of a test case to resolve the contractual uncertainty around the validity of many business interruption claims.

On 15 September 2020, the High Court handed down its judgement in the FCA’s business interruption test case, with the Court finding in favour on many of the arguments advanced for policyholders by the FCA. On 2 October 2020, both the FCA and the insurers’ party to proceedings were granted leave to submit their appeals to the Supreme Court. The appeals were heard by the Supreme Court in mid-November 2020. The Supreme Court delivered its judgement on 15 January 2021 whereby it allowed the four appeals raised by the FCA and dismissed those raised by Insurers. The Supreme Court judgement largely found in favour of the FCA and, in effect, policyholders. In some matters, its judgement differed from that of the High Court but again, found largely in favour of policyholders. The judgement reached by the Supreme Court and how it impacts the High Court’s original judgement, as well as the cover provided under individual policies, is now being considered by insurers, who are required by the FCA to respond and communicate with policyholders swiftly and, in respect of valid claims, pay these promptly.

You can download our guide to the test case using the below link. It  will provide you with further information on the following:

  • Summary of the FCA’s test case
  • The expectations on Insurers during the test case
  • The expectations on Insurers following the High Court and Supreme Court’s judgements
  • An overview of the High Court and Supreme Court judgements
  • Likely next steps and considerations
  • Other information on how it may impact policyholders

We will continue to update this page with any further developments.

If you have suffered a financial loss as a result of interruption to your business due to Covid-19, this guide also includes useful information for you and details of who you should contact should you wish to discuss making a claim to insurers under your policy.  

Get in touch:

If you would like to discuss any of the matters raised below, please get in touch with your normal point of contact at Howden. Alternatively, please get in touch either by phone or by dropping us an electronic message, details of which can be found here.

Download our FCA test case guide