Court delivers judgment on FCA test case
The Financial Conduct Authority (FCA), the UK’s financial conduct regulator, brought court proceedings in July 2020 to test how certain business interruption insurance policies respond to claims arising from COVID-19.
The judgment runs to over 150 pages and will take a little time for us to fully review, but the court has, broadly speaking, agreed that a number of policies do provide cover for business interruption losses as a result of COVID-19.
Whilst this will provide welcome news to many of our clients, both insurers and the FCA will now need time to review the judgment. If any of the parties to the case determine that there are aspects of the judgment they wish to appeal, they will seek permission to do so from the court. Should an appeal take place, the position on the cover available under a policy including any existing claims will remain unchanged by the judgment until that appeal process has concluded.
The FCA has said that every policyholder who has made a claim or complaint that is potentially affected by the judgment should receive an update from their insurer within 7 days.
Now that the judgment has been handed down, the parties must wait for a consequentials hearing to take place, at which time the Judges will make certain declarations in respect of their judgment and will likely also address the parties’ rights of appeal. The date of the consequentials hearing is expected to be fixed shortly with the High Court and is likely to take place in October. The court has already agreed to live-stream the hearing if it is heard remotely.
Due to the likelihood of an appeal from one or more insurers, the judgment is not a final determination – we will need to wait until conclusion of any appeal before any of this can be acted upon.
If you are waiting for an outcome on your claim, there are some things you can do now to prepare. Gather together the following evidence in support of your claim:
- Details of confirmed reports of COVID-19 at your premises or in the near vicinity, this should include date and time of the notification/incident and actions taken as a result;
- a summary of weekly or monthly turnover for the last 24 months, which you should keep up to date;
- annual accounts for the last two financial years, audited if available;
- management accounts for the last two financial years;
- management accounts for the current financial year to date, which you should keep up to date; and
- details of any business support grants received by the insured business, including any furlough payments.
We will keep you updated with relevant information as it becomes available. In the meantime, if you have any questions, please do not hesitate to contact us.