The Financial Conduct Authority of UK (FCA) has started proceedings in London’s ‘High Court of Justice’ to seek clarity from the courts on whether the wording of BI policies should provide cover during this pandemic.
The national lockdown in the UK to curb the spread of COVID-19 has triggered insurance claims from companies seeking compensation for having to shut down their activities. However, most insurers have rejected such claims stating that BI policies do not cover a global pandemic.
The regulator had selected 17 examples from BI insurance policies used by 16 insurers, eight of whom have been asked to take part in the court case. The regulator has filed the test case against Hiscox, Arch Insurance UK, Argenta Syndicate Management, Ecclesiastical Insurance, MS Amlin Underwriting, QBE UK, RSA and Zurich.
In an earlier statement, the FCA interim chief executive Christopher Woolard said, “The court action we are taking is aimed at providing clarity and certainty for everyone involved in these business interruption disputes, policyholder and insurer alike.
“The identification of a representative sample of policies and the agreement of insurers who underwrite them to participate in these proceedings is a major step forward in progressing the matter to court.”
As of 10 June, the regulator has updated the initial list of affected insurers and the policy wordings they use to reflect the changes to the ‘Representative Sample of Policy Wordings’ document comprising a selection of policy wordings which the FCA believes captures the majority of the key issues that could be in dispute.
This list is not exhaustive and FCA said its expectation remains to publish a list of all the relevant insurers and wordings that may be impacted by the test case in early July.
For the court case, skeleton arguments and replies will be served in the first half of July before a five to 10 day court hearing is held in the second half of that month.
Asia Insurance Review