• July 13, 2020

FCA court case regarding COVID-19 insurance cover

There has been much confusion over the COVID-19 crisis and the response from insurers. Let's discuss the implications for clients with business interruption insurance.

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In an attempt to gain greater clarity over policy cover the FCA has started a High Court action against a number of insurers. We have had a number of queries from our customers regarding the test case and what it means for commercial policyholders; we hope this note will help you to understand the process and how it might affect you.


The aim of the test case is to bridge the current wide gap in how certain policy terms and clauses are interpreted. By acting quickly with its own test case the FCA hopes to speed up the process rather than to wait for various individual and class action cases to be heard.

Christopher Woolard, Interim Chief Executive at the FCA said:

‘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.’

The proceedings are focused on potential cover for business interruption (BI) losses. Traditionally, BI policies cover loss of revenue or profit following damage, such as a storm or fire. Some policies also provide additional cover for so-called ‘non-physical damage’ such as closure of premises, denial of access or cover for certain diseases. It is these extensions that have proved controversial and are now being tested in the High Court.

The FCA has selected a sample of policies to represent the majority of disputes. If the outcome is that policies should pay out the FCA will expect all insurers – even those outside the Court Case – to react accordingly.


The FCA requirement for claimants and complainants

Many policyholders have submitted claims, some of which may have been concluded. Others have formally complained when their claim has been declined. The FCA has instructed insurers to contact those customers who might be affected to draw their attention to the test case and the potential outcome. 

We are starting to see these communications and are getting in touch with clients to discuss what it means, although it is possible that some insurers may send them direct without copying us in.


Customers who have NOT submitted a claim or made a formal complaint to insurers

We appreciate that some clients may not have submitted a business interruption claim for COVID-19 related losses. Others may have only made enquiries about whether they have cover. In such cases, even if your policy wording is in the scope of the FCA court case, insurers will not be communicating with you as they have nothing to formally respond to.


Here to help

Whilst there is no guarantee anything will change as a result of the case, rest assured that at Clear we will be keeping a close eye on developments and will keep affected policyholders informed as and when the outcomes of the case are known. 

The hearing is scheduled to start on 20th July and is likely to last between 3 and 8 days. The judges will then retire to consider their verdict and they should then indicate when their judgement should be delivered. 

The FCA action could be positive for many policyholders and we hope this note explains the process. We are committed to helping our clients during these difficult times so please also visit the COVID-19 FAQs section of our website for further information.

If you wish to discuss submitting a COVID-19 related business interruption claim please contact a Clear representative who will be pleased to help.

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