Supreme Court Rules on FCA Business Interruption Insurance Case

Supreme Court judges have ruled in favour of policyholders following a case bought forward by the Financial Conduct Authority (FCA), which aimed to provide legal clarity on business interruption insurance policies during the coronavirus crisis.

Last spring, a large number of businesses made claims through business interruption (BI) insurance policies for the loss of earnings that occurred as a result of government restrictions. Unfortunately, many insurers rejected these claims due to contractual uncertainty. As a result of numerous complaints from policyholders as a result, the FCA sought clarification from the High Court and Supreme Court on their behalf.

Following the case testing of policy wording, the ruling from the Supreme Court found in favour of policyholders with appeals from insurers being denied. Their findings will result in more policyholders having valid claims, which could see insurers making significant payouts.

The judgement is binding on the eight insurers that agreed to be in the test case, who were:

  • Arch Insurance (UK) Ltd
  • Argenta Syndicate Management Ltd
  • Ecclesiastical Insurance Office Plc
  • MS Amlin Underwriting Ltd
  • Hiscox Insurance Company Ltd
  • QBE UK Ltd
  • Royal & Sun Alliance Insurance Plc
  • Zurich Insurance Plc

Following this judgement, many policyholders who have cover may now have their claims for coronavirus-related business interruption losses paid. We know that for those businesses, this news offers a much needed lifeline after such a challenging time.

The FCA advise that ‘policyholders may wish to contact their broker and/or insurer before accepting any full and final settlement offer, in case it needs to be updated following the Supreme Court judgment.’