On 15 January 2021 the Supreme Court gave its ruling on the Financial Conduct Authority’s (FCA) landmark and highly publicised business interruption insurance test case in the context of the ongoing COVID-19 pandemic.

The FCA’s test case was brought against 8 named insurers (who were asked and agreed to participate in the test case), as the Court was asked to adjudicate upon 21 samples of policy wording utilised by several insurers in the market, including the 8 named insurers in the test case. The policy’s wording in question related to business interruption insurance and whether or not policyholders were entitled to claim for losses brought about by the pandemic (including loss of business and trade because of the Government’s mandatory lockdowns).

In September 2020 the High Court found in favour of the FCA on most points, and chiefly that policyholders looking to claim for losses due to business would be entitled to do so based on the 21 samples of policy wording. This included cases where COVID-19 had directly affected business due to disease (i.e. because of staff members contracting the virus) and where trade had been interrupted due to forced closures following the lockdowns. These findings were then subsequently appealed against and taken to the Supreme Court.

The Supreme Court, following an appeal made by a number of parties to the test case, dismissed the appeal and upheld the High Court’s decision. Although the Supreme Court disagreed with the scope of some of the High Court’s ruling, in respect of the way in which policy wording should be interpreted, the Supreme Court more or less agreed with the High Court’s decision.

If you hold an insurance policy in respect of business interruption insurance, it is likely that you will be entitled to claim under the terms of that policy for losses. This is particularly so if your policy contains the wording referred to by the FCA in its test case and your policy is underwritten by one of the insurers that were party to the test case, who were:

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

Whilst the Supreme Court’s ruling has resolved many of the early issues that policyholders were likely to face, there are a number of questions still to be answered, including aggregation and whether insurers should accept that the disruption caused by the pandemic is one event or more.

If you haven’t made a claim yet:

We can review your insurance policy and assist in your submission of a claim whilst applying our experience and advising you of the steps your insurer is likely to take.

If you have previously attempted to make a claim:

Insurers covered by the Supreme Court’s verdict are expected to contact affected policyholders within 7 days of the ruling (22 January 2021) and provide further guidance on how such claims will be addressed. Insurance companies must commence a claims adjustment process immediately, but it may be that insurers not bound by this ruling or policies with different wording might need to be pushed to take action.

If your insurer was not one of those involved in the Supreme Court ruling, you should certainly review your policy and any claim previously submitted, with a view to revisiting a claim in light of the Supreme Court’s decision.

Once your insurer has accepted cover is in place, it is almost certain that you will be expected to justify and provide evidence of all losses claimed. It is important at this juncture for policyholders to carry out an exercise to properly calculate all losses and, where applicable, provide documentary evidence in respect of those losses. For loss of business or trade, it is likely that some accounting evidence will be required. As a policyholder looking to claim, this exercise should be done as soon as practicable.

If you do not hear from your insurer by 22 January, we can provide you with the support you will need in revisiting your claim and improve your chances of success. We can help you review and understand your policy wording in the context of the Supreme Court ruling to assess and formulate a formal request to revisit any declination of coverage. We will support you in calculating all losses, including consequential losses, to ensure you claim the full amount you are entitled to.