Authors
Charlotte Hill

Charlotte Hill

Partner

Read More
Daniel Hirschfield

Daniel Hirschfield

Professional support lawyer

Read More
Authors
Charlotte Hill

Charlotte Hill

Partner

Read More
Daniel Hirschfield

Daniel Hirschfield

Professional support lawyer

Read More

18 May 2020

Business interruption insurance – the FCA seeks legal clarity

  • QUICK READ

The Financial Conduct Authority (FCA) intends to seek a judgment from the courts to resolve some contractual uncertainty in business interruption (BI) insurance policies that has arisen as a result of the COVID-19 pandemic. In the public interest and to avoid numerous BI policyholders seeking guidance from the courts at considerable expense, the FCA will put forward policyholders' arguments to their best advantage for a quicker and cheaper solution. This is not intended to replace the existing options or current claims (for example negotiation, settlement, arbitration etc.), rather, it is to provide clarity and certainty for some policyholders whose claims, as the FCA notes, are being refused when the firms think they should be considered.

BI policies are complex, and the terms and types of cover provided can vary significantly across the industry. Both customers and firms, are facing increasing uncertainty and difficulty in determining whether a policyholder has cover and can make a claim, and the FCA has doubts over the interpretation of the terms of BI policies in some cases. To avoid the increase in disputes arising during the current coronavirus crisis, the FCA has decided to resolve some key contractual uncertainties through its test case in the High Court.

Accordingly, the FCA wishes to engage with willing policyholders and insurance intermediaries over unresolved disputes with insurers over BI policy terms to identify a sample of cases. It invites firms to put forward the following information:

  • arguments on why cover should be available in cases where they believe insurers have not adequately responded to a claim
  • the details of the policy that has not responded
  • the brief facts of the case.

The FCA invites stakeholders to email any material for consideration by Wednesday, 20 May 2020 to: biinsurancetestcase@fca.org.uk. It reminds all stakeholders that any information provided is confidential and subject to the FCA's litigation privilege (meaning it would be entitled not to produce it to a third party or the court).

The FCA encourages policyholders and insurance intermediaries to submit their information for consideration to ensure the FCA can act in their best interests and evaluate all the arguments and materials. It has developed a Policyholder Engagement Statement and published a dedicated webpage to provide information, updates and access to relevant documents including court pleadings.

Help is at hand

If you would like to discuss any of the points arising out of the FCA's announcement or if you would like assistance in making a submission to the FCA on your BI policy concerns, please get in touch.

Call To Action Arrow Image

Latest insights in your inbox

Subscribe to newsletters on topics relevant to you.

Subscribe
Subscribe

Related Insights

deposit box
Financial services regulatory

COVID-19: How the financial regulators are responding

20 May 2020
IN-DEPTH ANALYSIS

by multiple authors

Click here to find out more
piggy bank
Financial services regulatory

Financial Services update - May 2020

7 May 2020
IN-DEPTH ANALYSIS

by Charlotte Hill and Daniel Hirschfield

Click here to find out more
London skyline
Financial services regulatory

COVID-19: Senior Managers and Certification Regime (dual-regulated firms)

17 April 2020
IN-DEPTH ANALYSIS

by Charlotte Hill and Daniel Hirschfield

Click here to find out more