Business Interruption Insurance Coronavirus Court Test Case

Published / Last Updated on 01/06/2020

An announcement made by the Financial Conduct Authority (FCA) back on the 1st May 2020, regarding business insurance policy wording, will be updated by the FCA today 1st June 2020 on progress for its 'test' court action on Business Interruption (BI) insurance policies.

The FCA has reviewed over 500 relevant policies from 40 insurers after approaching 56 insurance companies and finding 17 policy wordings that could be in dispute.

The update gives more details of the proposed court action, the insurers that have used the wordings and the ones that have been invited and have agreed to participate in the proceedings and will contain a list of sample policy wordings that the courts will examine.

The FCA will produce a draft guidance for all insurers to check policy wordings against the ones they intend to test to see if theirs will be impacted by the outcome of the case.

In early July 2020, the FCA will publish a list of all relevant insurers and policies that may have impacted wordings.

The draft guidance will contain the FCA’s expectations of all insurance firms handling BI claims and any related complaints between now and the court decision.

The FCA will be taking a representative sample of cases to court, to achieve clarity for all concerned in an unprecedented situation and help insurers and policyholders have a clearer view of which business interruption policies respond to the pandemic and the ones that don’t.  The courts may well decide a number of the policies respond and other that do not respond to the pandemic.

17 samples of policy wordings have been selected from all the reviewed policies that have key arguable issues and below are the 16 insurers that have used at least one of the policy wordings that will be examined in the test case.

  • Allianz Insurance PLC (part of Allianz SE)
  • American International Group UK Limited (part of American International Group, Inc.)
  • Arch Insurance UK Limited (part of Arch Capital Group Limited)
  • Argenta Syndicate Management Limited (part of Hannover Re)
  • Aspen Insurance UK Limited (part of Aspen Insurance Holdings Limited)
  • Aviva Insurance Limited (part of Aviva plc)
  • Axa Insurance UK PLC (part of AXA SA)
  • Chubb European Group SE (part of Chubb Limited)
  • Ecclesiastical Insurance Office PLC
  • Hiscox Insurance Company Limited (part of Hiscox Limited)
  • Liberty Mutual Insurance Europe SE (part of Liberty Mutual Group)
  • MS Amlin Underwriting Limited (part of MS&AD Insurance Group Holdings, Inc.)
  • Protector Insurance UK (part of Protector Forsikring ASA)
  • QBE UK Ltd (part of QBE Insurance Group Limited)
  • Royal & Sun Alliance Insurance PLC (part of RSA Insurance Group plc)
  • Zurich Insurance PLC (part of Zurich Insurance Group Limited)

The insurers who underwrite the policies below have been asked to assist the FCA by participating in the High Court test case;

  • Arch Insurance (UK) Limited
  • Argenta Syndicate Management Limited
  • Ecclesiastical Insurance Office PLC
  • Hiscox Insurance Company Limited
  • MS Amlin Underwriting Limited
  • QBE UK Ltd
  • Royal & Sun Alliance Insurance PLC
  • Zurich Insurance PLC

The test case and conclusions will affect other insurers, and a comprehensive list of other insurers and BI policies that the test case will affect will be published early July 2020.

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