Business interruption insurance: draft final order

The latest update from the FCA following the Supreme Court’s judgment last month includes a working draft of the order and declarations required to give practical effect to the decision. This text runs to 30 pages, nearly all of which has been agreed between the regulator and interested insurers. Yes, there are a few fine details on which the FCA and insurers differ but the regulator nevertheless expects that the Court will be able to finalise the declarations without another hearing. In addition, the FCA’s update yesterday repeats its clear view that “the judgment from the Supreme Court gives insurers the clarity they need to conclude their claims processes with the large majority of their BI customers, without waiting for the declarations.” In the context of the test case, the phrase “the large majority of their BI customers” should be understood as describing only those businesses with policies (or extensions) written using the wordings scrutinised by the Court. As the FCA put it last April in its Dear CEO letter to insurers, standard commercial policies did not generally provide this sort of BI cover: “our estimate is that most policies have basic cover, do not cover pandemics and therefore would be unlikely to pay out in relation to the Covid-19 pandemic.”

Alistair Kinley, Director of Policy & Government Affairs

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