The insurance industry is back in the spotlight today after the Financial Conduct Authority (FCA) published an update on progress on its court action on business interruption (BI) insurance policies.

The test case is crucial for the insurers as it will establish the limits of companies’ ability to make claims depending on the wording of their policies.

As FCA chief executive Christopher Woolard explained, ‘The court action we are taking is aimed at providing clarity and certainty for everyone involved in these BI disputes, policyholder and insurer alike. We feel it is also the quickest route to this clarity and by covering multiple policies and insurers, it will also be of most use across the market.’


In its findings so far, the FCA has taken the view that most business interruption policies are focused on property damage, with only very basic cover for BI as a consequence of that damage,  so ‘in the majority of cases insurers are not obliged to pay out in relation to the coronavirus epidemic.’

However it is bringing a test case to look at the remainder of the policies on the market which could still be argued to include cover. Last month it received over 1,200 submissions from policyholders and brokers who were in dispute with their insurers.

Central to the FCA case is the actual policy wording, so it has reviewed over 500 relevant policies from 40 insurers and has narrowed the list down to 17 specific policy wordings ‘that capture the majority of the key issues that could be in dispute.’

The case will be filed on 9 June, with the insurers given until 23 June to file their defences. ‘Skeleton arguments’ will be heard in the first half of July and the full court hearing will take place in late July.


Among the firms involved in the process are Aviva (AV.), Hiscox (HSX) and Royal & Sun Alliance (RSA).

Hiscox issued a statement in response to the FCA update, saying that it was participating in the test case ‘in order to provide certainty for businesses and brokers on the application of policies as quickly as possible.’

It added that it was ‘actively settling claims for event cancellation and abandonment, media and entertainment and other segments including travel.’

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Issue Date: 01 Jun 2020