News

The Court decides the FCA Business Interruption Insurance test case

On 15^th September 2020, the High Court handed down judgment on a case which will potentially affect thousands of business owners, colloquially known as the COVID-19 Business Interruption Insurance test case, but which the proper title is The Financial Conduct Authority v Arch and Others.

The FCA, on behalf of policyholders, asked the High Court to consider 21 lead sample wordings from eight insurers, regarding Business Interruption Insurance and the validity of it as a result of the effects on business due to the coronavirus pandemic and the national lockdown.

The court found in favour of the FCA on the majority of the key issues and provides relief to a number of the thousands of policyholders thought to be affected.

Christopher Woolard, Interim Chief Executive of the FCA, commented “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. 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.”

It is not known, at this stage, whether the insurers might appeal, but the FCA and the insurers have agreed that any appeal should be heard on an expedited basis and this may include the matter going straight to the Supreme Court (rather than the Court of Appeal first).