15 January 2021
Supreme Court Judgment – FCA case on Business Interruption Insurance
The Supreme Court has handed down its judgment in the Financial
Conduct Authority’s (FCA) covid-19 business interruption insurance test case, ruling
largely in favour of policy holders. The Supreme Court unanimously dismissed
Insurers’ appeals and allowed all four of the FCA’s appeals. The Supreme Court
also determined that the Orient Express case
was “wrongly decided”.
The Supreme Court judgment followed a leapfrog appeal from
the High Court in September 2020 which considered 21 different sample policy
wordings from 8 different insurers. The High Court proceedings were brought by
the FCA to bring about clarity on the interpretation of contractual provisions
contained within business interruption insurance policies and other causation
issues in the context of covid-19.
The Supreme Court has ruled that cover may be available for
partial/full closure of premises and for mandatory closure orders that were not
legally binding; that valid claims should not be reduced because the loss would
have resulted in any event from the pandemic; and that two additional policy
types from insurer QBE provide cover.
The FCA have stated that they will be “working with insurers
to ensure that they now move quickly to pay claims that the judgment says
should be paid, making interim payments wherever possible”.
The judgment will bring positive news for policyholders who
have suffered losses as a result of the covid-19 pandemic, and who will now
have their claims for coronavirus-related business interruption losses paid.