18 May 2020
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:
The FCA invites stakeholders to email any material for consideration by Wednesday, 20 May 2020 to: email@example.com. 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.
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.
by multiple authors