We recently explained the background to why the FCA are intervening on whether some Business Interruption (BI) policies should be paying claims, using a test case through the court. There have now been some developments and these are explained below.
High Court proceedings – 15 June
The FCA announced that they have identified the representative sample of policy wordings to be examined in the test case, insurers that use those wordings, and which of those insurers they have invited, and have agreed, to participate in the proceedings.
Order from first Case Management Conference (CMC) on 16 June
On 16 June the first CMC took place remotely, and it was confirmed that the timetable would be expedited and would follow the FCA’s suggested timetable and the Financial Markets Test Case Scheme will apply. There was disagreement between the FCA and insurers over some of the declarations the FCA wishes answered, and the outcome of these disagreements will be decided by the court on 26 June at a second CMC. The insurers defences are due to be submitted by 23 June.
The FCA website also includes the assumed facts, particulars of claim and an issues matrix which may prove of interest.
What does it mean for me?
There are some important points to note from the CMC and the general FCA directions which could affect you.
- Firstly, the court is only considering Business Interruption cover, and where there are disagreements over the wording and coverage. If you have BI cover in place and feel the policy is not clear, you should therefore make a claim, but if you do not, or the cover is clear, this unfortunately does not change your position
- Insurers are required to check all of their policy wordings by 08 July and advise the FCA which they believe could be affected by the outcome of the case, and the FCA will publish a full list of insurers and policy wordings
- By 15 July insurers will be required to inform all clients who have made a Covid-19 BI claim or complaint whether their claim or complaint could be affected by the test case, and if not why not
- From 17 June any time limits for making claims under the policy, or making a complaint to the Financial Ombudsman Service, is suspended until after the test case outcome
- Claims can still be settled in the meantime, but following the outcome of the test case insurers will have to reassess all claims and apply judgement to these based on the test case outcome
Our advice remains as follows:
- If you have any question mark over the BI cover, make a claim – you can check on the FCA website whether the specific clauses are covered under the test case, it is intended that most will be
- If the cover is clear or you do not have BI cover, the test case will not affect your ability to make a claim
- If an insurer has denied liability, or is not currently moving the claim forward, it is worth waiting for the test case before taking any further action
- If you are not with Hayes Parsons, chase your insurer/broker if you have not had a response by 15 July