Currently the FCA are seeking legal clarity on Business Interruption (BI) insurance, as the Coronavirus has resulted in many businesses suffering financial loss and closures. There has been concern about the lack of clarity and certainty for customers who are trying to make a claim. Variation on types of cover and policy wordings used have made it difficult for customers to determine whether or not they have a valid claim.
To try and reduce this uncertainty, the FCA have sought court declarations as part of a test case to try and resolve the uncertainty around BI claims.
What is a test case and what will it do?
The purpose of the test case will be legally binding on the insurers in respect of the interpretation of the policy wordings reviewed in court. This will also provide persuasive guidance for policy wordings and claims, that can be taken into account in other future court cases.
In the last two weeks of July, the trial of the test case took place over eight days in the High Court.
Submissions were made by the FCA, the intervenors Hospitality Insurance Group Action and Hiscox Action Group, and the eight Defendants who had agreed to be part of the test case:
Arch Insurance (UK) Ltd
Argenta Syndicate Management Ltd
Ecclesiastical Insurance Office Plc
MS Amlin Underwriting Ltd
Hiscox Insurance Company Ltd
QBE UK Ltd
Royal & Sun Alliance Insurance Plc
Zurich Insurance Plc
The exact dates of judgement are not yet known, however Lord Justice Flaux expressed a hope that judgment would be available by the middle of September, although he made clear that this was not a binding indication.
When the FCA initiated the test case they developed a Policy Holder Engagement Statement for policy holders, which set out the FCA's approach to the test case for BI insurance policies. The key points are below:
The FCA will put forward the policyholders' claim to their best advantage.
The intended action will not prevent policyholders from pursuing issues through negotiated settlement, arbitration, court proceedings as a private party, or taking eligible complaints to the Financial Ombudsman Service.
Information provided by the policyholder will be strictly confidential and covered by the FCA litigation privilege.
The FCA will consult with the policyholder and intermediaries in key parts of the case.
We will continue to update our blog as and when we know further information about this matter.
UPDATE 9th September 2020
The court has stated that judgment will be handed down at 10:30am on Tuesday 15 September 2020.
UPDATE 16th September 2020
The FCA have published a judgement in the test case which has been handed down by the High Court. The judgement is very complex and runs over 150 pages long.
Whats next for policyholders?
Every policyholder who has made a complaint or claim that may have been affected by the test case will receive an update from their insurer within 7 days.
In the meantime this does not stop policyholders from making or settling claims against their BI insurance. Policyholders are also able to make a complaint to their insurer if they are not happy with the outcome, and refer the complaint the The Financial Ombudsman Service.
If you have already made a complaint to the Financial Ombudsman Service and your claim may have been affected by the test case, then you should wait for further information from the Ombudsman.
Invitation to speak with a legal team.
The FCA are has set aside time with their legal team from 21st September to 22nd September to speak directly with policyholders and give legal advice based on their claim.
The FCA will also consider meeting requests made to them by 5PM on Thursday 17th Septemeber.
In order to be considered for a meeting you must email biinsurancetestcase@fca.org.uk stating only the word 'meeting' in the subject line of the email, stating your availability in the body of the email. If you would like to discuss a particular policy then you must attach a copy of your policy documents a long with any correspondence with your insurer.
Update 22nd September 2020
Following a judgement from the High Court the FCA have published a dear CEO Letter which outline the FCA’s expectation from Insurers following the case.
Consequential hearing
The Court has confirmed that the consequential hearing will take place on 2 October, where the Court will hear submissions from the parties on the appropriate declarations to be made by the Court in the light of the judgment and on any applications for appeal.
Update 25th September 2020
Meetings with policyholders and other stakeholders
The FCA received hundreds of requests for meetings with their legal team to discuss the impact of the test case. In order to cater to such high demand and to speak to as many policyholders and their legal representatives as possible, the FCA held meetings over 4 days this week. These meetings addressed issues such as the impact of the judgment for policyholders with policies in the representative sample considered by the Court and for policyholders with other policies.
The court has ordered that:
The deadline for filing any application for a certificate under section 12 of the Administration of Justice Act 1969 is 4pm on Monday 28 September 2020. (This is an application by a party seeking a 'leapfrog' appeal to the Supreme Court - an appeal that does not need to be heard by the Court of Appeal first.)
The High Court will consider any applications for a 'leapfrog' appeal or for an appeal to the Court of Appeal at the consequentials hearing on 2 October.
The deadline for skeleton arguments (written submissions) for the consequentials hearing on 2 October is 12:00 noon Wednesday 30 September.
The deadline for filing any appellant’s notice pursuant to rule 52.12(2) of the Civil Procedure Rules 1998 is extended to Friday 9 October. (This is an application by a person applying directly to an appeal court (as opposed to the High Court here) for permission to appeal.)
Update 29th September 2020
The deadline for parties to apply for a 'leapfrog' appeal to the Supreme Court was yesterday. We have published a press release stating the FCA’s position on the appeals process.
*information obtained from www.fca.org.uk*
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