Business insurance test case may ‘leapfrog’ to Supreme Court

The Financial Conduct Authority and seven insurers have filed applications for a “leapfrog” appeal to the Supreme Court in the test case over whether businesses impacted by Covid-19 can claim under their business interruption insurance policies. The applications have been made on a “precautionary” basis while the parties continue to negotiate a way forward without any need for an appeal. In a statement, the FCA said: “The FCA’s intention has, throughout the process, been to achieve clarity on affected BI policies at speed. We believe that clarity was provided in the initial judgment handed down on 15 September. “The FCA therefore continues to work closely and at speed with the eight insurers and two intervenors that participated in the test case to reach an agreement in principle on a range of issues whereby an appeal process would not be required, and payments would be made on eligible claims as soon as possible. Positive discussions continue with all parties.” A hearing is scheduled for 2 October, at which point the applications for permission to appeal to the Supreme Court, if pursued, will be considered by the High Court. On 15 September, Lord Justice Flaux and Mr Justice Butcher ruled in the closely watched test case brought by the City regulator against the insurance industry, which potentially affects around 370,000 policyholders who, due to complicated wording, are unsure whether or not they are entitled to claim. The FCA had asked the court to clarify the extent to which business interruption insurance covers losses arising from the Covid-19 pandemic and to prevent insurers from rejecting claims outright. Following the decision, the FCA said the judges had backed the arguments brought by lawyers representing policy holders “on the majority of the key issues.” Broadly, the ruling says that most, but not all, of the disease clauses used in the trial provide cover for the circumstances of the current pandemic. “We brought the test case in order to resolve the lack of clarity and certainty that existed for many policyholders making business interruption claims and the wider market,” FCA interim chief executive Christopher Woolard said in a statement following the judgment. “We are pleased that the court has substantially found in favour of the arguments we presented on the majority of the key issues. Today’s judgment is a significant step in resolving the uncertainty being faced by policyholders. We are grateful to the court for delivering the judgment quickly, and the speed with which it was reached reflects well on all parties.”   To send feedback, e-mail jess.harrold@egi.co.uk or tweet @estatesgazette Photo by Jonathan Goldberg/Shutterstock