FCA publishes new ‘policy checker’ relating to BII test case

On each of the last three Fridays the FCA has posted really important information about the business interruption insurance test case.

On Friday 15 January the content included the Supreme Court’s judgment that day, press releases and summaries of the decision. Last Friday saw the publication of the FCA’s Dear CEO letter setting its expectations of insurers and the release of a table indicating the outcome of the test case by policy type.

This week, policyholders are the regulator’s target audience, with the release of a policy checker tool and an FAQ web page for insured businesses looking “to find out if your insurance policy may cover business interruption losses caused by coronavirus (Covid-19) as a result of the FCA’s test case and what you can do next.”

Alistair Kinley, Director of Policy & Government Affairs

Business interruption insurance – test case update – judgment expected in December or January

This is a very brief overview of very recent developments and is most definitely not an analysis of the arguments raised earlier this month before the Supreme Court, other than by way of a reminder that:

  1. the competing arguments of the parties – the FCA and the interested insurers – focus on the question of whether or not the range of representative business interruption (BI) wordings provide indemnity for operating losses sustained by policyholders during the first ‘lockdown’ of 2020, and
  2. the decision at first instance examined this by grouping the relevant clauses into three broad types – disease clauses, prevention of access clauses and hybrid clauses – interpreting each in its context, dealing with causation, prevalence of Covid-19, counterfactuals and with the effect on claims adjustment of so-called ‘trends’ clauses.
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Business interruption insurance test case fast-tracked to Supreme Court

To recap, the High Court gave permission in October for parties’ ‘leap frog’ appeals to the Supreme Court (SC) following its decision in September. Now, on 2 November, the SC has agreed to hear the appeals. That was widely expected but what is much more unusual is that the SC hearing will take place only a fortnight later, beginning on Monday 16 November.

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