Business interruption insurance

First published: Last updated: 12/05/2021 See all updates

Find out about how we have been obtaining legal clarity on business interruption (BI) insurance during the coronavirus (Covid-19) crisis. We’ll update this page with information on what we’ve done and are doing

The coronavirus pandemic has led to widespread disruption and business closures resulting in substantial financial loss. Many customers have made claims for these losses under their BI insurance policies. There has been widespread concern about the lack of clarity and certainty for some customers making these claims, and the basis on which some firms are making decisions in relation to claims.

The issues surrounding BI policies are complex and it was recognised that they had the potential to create ongoing uncertainty for both customers and firms. The FCA accordingly sought clarification from the High Court as part of a test case, aimed at resolving the contractual uncertainty around the validity of many BI claims. The FCA advanced arguments on behalf of policyholders in the public interest. The test case was based on a representative sample of policy wordings. The High Court’s decision on the test case was subject to a leapfrog appeal to the Supreme Court.

The Supreme Court handed down its judgment on 15 January 2021 substantially allowing the FCA’s appeals and dismissing the insurers’ appeals. This means that many thousands of policyholders who have cover should now have their claims for coronavirus-related business interruption losses paid.

The judgment from the Supreme Court and High Court provide policyholders and insurers with clarity about whether customers have cover and can make a valid claim and the amount due to policyholders.

The Supreme Court judgment

On 15 January 2021, the Supreme Court handed down its judgment on the issues on appeal from the High Court. Its judgment relates to the High Court’s interpretation of common clauses in 13 out of the 21 business interruption policies in the representative sample. The judgment also considers whether the prevalence of coronavirus in or near the business was the effective ‘cause’ of losses.

The Supreme Court judgment is complex, runs to 112 pages and deals with many issues. A summary of the key points is below. Our legal team at Herbert Smith Freehills have published a bulletin summarising the judgment on their website, which may be referred to for further detail.

The FCA argued for policyholders that the ‘disease’ and ‘prevention of access’ clauses in the representative sample of 21 policy types provide cover in the circumstances of the coronavirus (Covid-19) pandemic, and that the trigger for cover caused policyholders’ losses.

The High Court’s judgment last September said that most of the disease clauses and certain prevention of access clauses (12 policy types from the sample of 21, issued by six insurers) provide cover and that the pandemic and the Government and public response caused the business interruption losses. The six insurers appealed those conclusions for 11 of the policy types, but the Supreme Court has dismissed those appeals, for different reasons from those of the High Court.

On the FCA’s appeal, the Supreme Court ruled that cover may be available for partial closure of premises (as well as full closure) and for mandatory closure orders that were not legally binding; that valid claims should not be reduced because the loss would have resulted in any event from the pandemic; and that two additional policy types from insurer QBE provide cover. This will mean that more policyholders will have valid claims and some pay-outs will be higher.     

The judgment is legally binding on the eight insurers that agreed to be parties to the test case. Those insurers are:

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

The judgment also provides authoritative guidance for the interpretation of similar policy wordings and claims. It can be taken into account in other court cases, including in Scotland and Northern Ireland, by the Financial Ombudsman and by the FCA in looking at whether insurers are handling claims fairly. The judgment does not determine how much is payable under individual policies, but provides the basis for doing so.

The High Court judgment

The High Court handed down its judgment on 15 September 2020. Large parts of the High Court’s judgment (and the associated declarations) are superseded by the judgment of the Supreme Court. But certain parts of the High Court’s judgment were not appealed and therefore have a status similar to that of the Supreme Court’s judgment as described above.

FCA guidance and statements for policyholders

We have published the following guidance and statements of particular importance to policyholders:

  • Policy checker and FAQs which help policyholders find out if their insurance policy may cover business interruption losses caused by coronavirus and what they can do next.
  • Final guidance for policyholders on how to prove the presence of coronavirus, which is a condition in certain types of policy. We have published a calculator to assist policyholders prove the presence of Covid-19 in their policy area. The results can be used to help make a claim under their business interruption insurance policy. This calculator supports the content with in our Finalised Guidance, specifically Chapters 7, 8 and 9. 
  • A list of policies assessed by insurers as, in principle, capable of responding to Covid-19 as a result of the test case.
  • FCA’s Dear CEO letter dated 22 January 2021, which includes information about how we expect insurers to handle claims and complaints following the judgments, making interim payments where appropriate, ‘stopping the clock’ on claims and complaints deadlines during the test case, full and final settlements, and considerations that should be taken into account when applying deductions of government support received by policyholders.
  • Table setting out the outcome of the test case and key paragraphs of the judgments according to policy type in the representative sample of 21 policy wordings.

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Latest updates
12 May 2021

Insurers have provided the latest submission of BI claims information, based on their records of the numbers of claims and the values of interim/initial payments and final settlements meeting the criteria specified in our information request. We have published the latest extract of BI claims, based on insurer submissions to the FCA at 5 May 2021.
30 April 2021

While the Supreme Court Office is not able to commit to a timeframe, it has indicated to the parties that the Declarations Order may be available next week. We will publish the Order on this webpage as soon as it is available.
21 April 2021 We have published a calculator to assist policyholders prove the presence of Covid-19 in their policy area. The results can be used to help make a claim under their business interruption insurance policy. This calculator supports the content with in our Finalised Guidance, specifically Chapters 7, 8 and 9.
13 April 2021 

Insurers have provided the latest submission of BI claims information, based on their records of the numbers of claims and the values of interim/initial payments and final settlements meeting the criteria specified in our information request.

We have published the latest extract of BI claims, based on insurer submissions to the FCA at 6 April 2021. 
22 March 2021

Our Dear CEO letter on 22 January 2021 set out our intention to gather information regularly from all affected insurers on the progress of their non-damage BI claims, and to publish some of this data. Insurers have provided the first submission of this information, based on their records of the numbers of claims and the values of interim/initial payments and final settlements meeting the criteria specified in our information request.

We have published some of this claims data for the first time, based on insurer submissions to the FCA at 3 March 2021. We intend to publish this data on a monthly basis.
12 March 2021 Our Dear CEO letter on 22 January 2021 set out our intention to send an information request to insurers for updated details of all non-damage BI policies that are, in principle, capable of responding to the Covid-19 pandemic following the Court judgments. This has been completed and we have today published the list of insurers and policies as submitted by insurers. The policies listed cover over 200,000 policyholders.
 
3 March 2021

Finalised guidance and feedback statement: Proving the presence of coronavirus (Covid-19)

We have published finalised guidance setting out how to prove the presence of Covid-19 in a particular area, based on the High Court’s judgment and declarations.

We have also published a feedback statement summarising the feedback received on our draft guidance published on 11 December 2020.

We are working to create an online calculator to help policyholders gather two types of evidence described in the guidance: ‘Reported Cases’ and ‘Estimated Cases’ (as described in Chapters 7, 8 and 9 of the guidance). The calculator should be available soon. If you would like to use the calculator, please sign up for our BI test case email alerts and you will get an email when the calculator is launched. 

15 February 2021

Submissions to the Supreme Court on the declarations 

The FCA and the other parties to the test case have made written submissions to the Supreme Court on the form of the declarations to be issued by the Court. These declarations will be the culmination of the judgments in the test case and will declare whether the policies in the representative sample potentially cover business interruption losses arising from the coronavirus (Covid-19) pandemic. 

We have published:

We expect that the Supreme Court will issue the declarations without a further hearing, but we do not know when. 

We believe that the judgment from the Supreme Court gives insurers the clarity they need to conclude their claims processes with the large majority of their BI customers, without waiting for the declarations.
29 January 2021

Policy checker and FAQs

We have published a policy checker and FAQs to help policyholders find out if their insurance policy may cover business interruption losses caused by coronavirus and what they can do next.
22 January 2021

Dear CEO letter on expectations of insurers

Following the judgment from the Supreme Court, we have issued a Dear CEO letter outlining our expectations of insurers following the judgment.

Table summarising the outcome of the test case by policy type

In order to assist policyholders and other stakeholders to understand the outcome of the test case, we have published a table setting out the outcome of the test case and key paragraphs of the judgments according to policy type in the representative sample of 21 policy wordings.
15 January 2021

Supreme Court judgment

The Supreme Court has handed down its judgment. It substantially allows the FCA’s appeal and dismisses the insurers’ appeals. This means that many thousands of policyholders who have cover should now have their claims for coronavirus-related business interruption losses paid.

We have issued a press release on the judgment.

Summary of the judgment

The judgment is complex and runs to 112 pages. Our legal team at Herbert Smith Freehills have published a bulletin summarising the judgment on their website.

Limited extension to consultation on draft guidance on presence of Covid-19

Our consultation closes on 18 January 2021. We are willing to extend the time for your comments on this draft document to Friday 22 January 2021 but only for matters that are supplemental and arise from the Supreme Court judgment. All other comments should be sent by the 18 January deadline.

Policyholders currently considering a full and final settlement offer from their insurer

Policyholders may wish to contact their broker and/or insurer before accepting any full and final settlement offer, in case it needs to be updated following the Supreme Court judgment. 
12 January 2021

Timing of the judgment from the Supreme Court

The Supreme Court has announced that it will deliver its judgment on Friday 15 January 2021 at 9:45 am. 

We understand that delivery of the judgment may last around 15 minutes, and the full written judgment is likely to be published on the Supreme Court’s website very soon after that.

In order to view the delivery of the judgment:
15 December 2020

Timing of the judgment from the Supreme Court

We have been informed by the Supreme Court that it will not be in a position to hand down the judgment before January 2021.
11 December 2020

Draft guidance on proving the presence of coronavirus (Covid-19)

We have published a statement and consultation on draft guidance as to how the presence of coronavirus in a particular area may be proved, based on the High Court’s judgment and declarations. We do not expect this aspect of the High Court’s ruling to be affected by the appeals to the Supreme Court and we are not pre-judging the outcome of the appeals. This document explains the types of evidence and methodologies which policyholders can use, together with links to further useful information for policyholders. This is intended to provide clarity for all parties and to help ensure that the process of proving the presence of coronavirus is made as simple as possible for policyholders, to enable them to receive pay outs as early as possible where they remain eligible following judgment from the Supreme Court. We are asking for comments on this guidance consultation by 18 January 2021.
26 November 2020

Publication of final transcripts

We have published:
23 November 2020

Draft transcript

We have published the draft transcript of day 4 of the Supreme Court appeal hearing. 
20 November 2020

Draft transcript

We have published the draft transcript of day 3 of the Supreme Court appeal hearing.
19 November 2020

Timing of judgment from the Supreme Court

The Supreme Court appeal hearing has now ended. Lord Reed recognised the importance of an early judgment for the businesses affected. He said that the Justices would do what they could to provide judgment as quickly as possible, but could not comment on whether that would be before Christmas or in January. The Court intends to keep the parties informed, and we will update this webpage to that effect as soon as we can.

Draft transcript

We have published the draft transcript of day 2 of the Supreme Court appeal hearing.
18 November 2020

Re-watching the appeal hearing 

Videos of the appeal hearing are being uploaded to the Supreme Court website. To find these, click on the following link and go to the ‘Watch hearing’ section at the bottom of the page: https://www.supremecourt.uk/cases/uksc-2020-0177.html 

Draft transcript  

We have published the draft transcript of day 1 of the Supreme Court appeal hearing. We will publish final transcripts when they are available.
16 November 2020

Timetable for Supreme Court appeal

The parties have agreed the full running order for the Supreme Court hearing, which started today, which is broadly as follows (using abbreviations for party names):

  • All Monday from 11.00 and Tuesday morning to 12.45: insurers open on their appeals (the order is QBE, Argenta, MS Amlin, RSA, Hiscox and Arch).
  • Rest of Tuesday, all of Wednesday, and 35 minutes Thursday morning:  the FCA responds on insurers’ appeals and opens on its appeal.
  • 40 minutes on Thursday morning: Hiscox Action Group respond and open on their appeal.
  • Thursday 11.45 to 15.15: insurers reply on their appeals (the order is Arch, Hiscox, Zurich, QBE, RSA, MS Amlin, Argenta) and respond to FCA and Hiscox Action Group appeals.
  • Closing 45 minutes on Thursday: FCA and Hiscox Action Group reply on their appeals.

The lunch adjournment is c.13.00-14.00 each day.

The Supreme Court has issued a hand out summarising the issues, facts, procedural chronology and counsel for the appeal.    
11 November 2020

Link to live-stream appeal hearing

The Supreme Court will live-stream the appeal, which is due to take place on 16-19 November. The Court will sit as follows:

  • Monday 16 November: 11am-4pm
  • Tuesday 17 – Thursday 19 November: 10.30am-4pm

In order to view the live-stream:

Written cases for the Supreme Court appeal

We have published the written cases for the appeals in the Supreme Court of:

See the third column of the table published on 4 November for whether the appeal may change the overall outcome of cover for a policy in the representative sample.

We have also published the written cases responding to those appeals:

We have also published:
4 November 2020

Publication of documents for policyholders 

In order to assist policyholders and other stakeholders in understanding the High Court judgment, High Court declarations and the test case generally, we have published: 

  • A table setting out the appeal status and the most relevant declarations and paragraphs of the judgment according to policy type in the representative sample.
  • The representative sample of policy wordings with a contents page, which can be navigated to by clicking on the policy type in the table above (there is no other change to this document).
  • A contents list for the High Court judgment.

None of these publications contain any new information, but they are intended to aid navigation of the court documents. They are not definitive or legally binding. Policyholders are again encouraged to speak to their insurance intermediaries and/or their advisers in the first instance for questions arising from the judgment, declarations and appeal.
2 November 2020

Date of appeal in the Supreme Court

On 2 November, the Supreme Court granted permission to appeal to all those who had applied for it (see 20 October update).

The appeal in the Supreme Court will be heard from Monday 16 November and is expected to last for 4 days.

The appeal hearing will be by video link. 

As we have stated previously, we believe that this 'leapfrog' appeal to the Supreme Court is the fastest way to get legal clarity for all parties in the event that it is not possible to find a solution with insurers which resolves the outstanding issues, before the appeal takes place, to enable pay-outs on eligible claims.

As Royal & Sun Alliance Insurance Plc has confirmed it will not be appealing the High Court's judgment in respect of the RSA4 wording, Hospitality Insurance Group Action has confirmed that it will not be seeking to intervene in the Supreme Court appeal.
20 October 2020

Publication of High Court declarations  

We have published the High Court declarations made in the test case. These are the culmination of the test case judgment and declare how and to what extent the policies in the representative sample respond to business interruption losses arising from the COVID-19 pandemic.  

We expect to publish shortly a guide to the declarations for policyholders. Policyholders are encouraged to speak to their insurance intermediaries and/or their advisers in the first instance for questions arising from the declarations. 

Policyholders should note that the FCA, six Defendant insurers and the Hiscox Action Group have applied to appeal the High Court judgment and declarations. This is addressed later in this update.    

We have also published:  

Publication of appeal applications to Supreme Court 

Following the High Court granting certificates for a ‘leapfrog’ appeal to the Supreme Court on 2 October, the FCA and others are entitled to apply to the Supreme Court for permission to appeal.  

As stated in our 30 September press release we are continuing discussions with insurers and action groups, to find a solution which resolves the outstanding issues as soon as possible to enable pay-outs on eligible claims. In parallel with this, the FCA, six Defendant insurers and the Hiscox Action Group have applied for permission appeal to the Supreme Court. We believe that this 'leapfrog' appeal is the fastest way to get legal clarity as quickly as possible for all parties in the event that it is not possible to resolve the outstanding issues in the coming weeks. 

We have published the FCA’s application to appeal to the Supreme Court.

We have also published applications to appeal to the Supreme Court from the six Appellant Defendants and Hiscox Action Group: 
6 October 2020

Draft transcript of consequentials hearing

We have published the draft transcript of the consequentials hearing on 2 October.
2 October 2020

Outcome of consequentials hearing 

Lord Justice Flaux and Mr Justice Butcher have made various orders consequential upon their judgment in the test case. 

The orders included a series of declarations as to the effect of the judgment, which we will publish as soon as available.

In light of the hearing, the FCA will review the final declarations and decide on its next steps. As stated in our press release on Wednesday, these will include pressing on with the application to appeal to the Supreme Court while continuing discussions with insurers and action groups to find a solution that avoids the need for appeal and enables pay-outs on eligible claims as quickly as possible.

The High Court granted ‘leapfrog’ certificates for an appeal to the Supreme Court to:

  • The FCA 
  • Arch Insurance (UK) Ltd
  • Argenta Syndicate Management Ltd
  • MS Amlin Underwriting Ltd
  • Hiscox Insurance Company Ltd
  • QBE UK Ltd
  • Royal & Sun Alliance Insurance Plc
  • Hiscox Action Group 

Those who received a certificate are now entitled to apply to the Supreme Court for permission to appeal. 

Ecclesiastical Insurance Office Plc withdrew its ‘leapfrog’ application before the hearing on 2 October. 

QIC Europe Limited applied to become a party to the test case in order to bring an appeal. The court rejected this application. 

The above will be contained in a sealed order from the court, which we will publish here as soon as it is available.
30 September 2020

Press release

We have published a press release, setting out the current position on discussions between the parties.

Consequentials hearing on Friday 2 October

On Friday 2 October, the Court will hear submissions from the parties on the declarations to be made by the Court in the light of the judgment and on applications for appeal.

The starting time is likely to be 10:30am, but this can be checked on the final court listing after 4.30pm on Thursday 1 October.

The hearing may last a full court day, finishing at 4:00pm.

The hearing will be live-streamed. In order to view the hearing live:

  • click on the following link, which will become live just before each day’s sitting starts https://fl-2020-000018.sparq.me.uk/
  • you do not need any specialist software to view the live-stream
  • please note that you must not record the live-stream

Skeleton arguments

We have published the following skeleton arguments (written submissions) for the consequentials hearing:

‘Leapfrog’ applications

We have published the FCA’s application for a ‘leapfrog’ appeal to the Supreme Court.

This is very short and is expanded upon in the FCA’s skeleton argument.

We have also published ‘leapfrog’ applications from the following Defendants and Intervener:
29 September 2020

Update on appeals process

The deadline for parties to apply for a 'leapfrog' appeal to the Supreme Court was yesterday. We have published a press release stating the FCA’s position on the appeals process.
25 September 2020

Meetings with policyholders and other stakeholders

We received hundreds of requests for meetings with our legal team to discuss the impact of the test case. In order to cater to such high demand and to speak to as many policyholders and their legal representatives as possible, we held meetings over 4 days this week. These meetings addressed issues such as the impact of the judgment for policyholders with policies in the representative sample considered by the Court and for policyholders with other policies. We are grateful to all participants for their views, which we are taking into account.

Upcoming milestones

The court has ordered that:

  • The deadline for filing any application for a certificate under section 12 of the Administration of Justice Act 1969 is 4pm on Monday 28 September 2020. (This is an application by a party seeking a 'leapfrog' appeal to the Supreme Court - an appeal that does not need to be heard by the Court of Appeal first.)
  • The High Court will consider any applications for a 'leapfrog' appeal or for an appeal to the Court of Appeal at the consequentials hearing on 2 October.
  • The deadline for skeleton arguments (written submissions) for the consequentials hearing on 2 October is 12:00 noon Wednesday 30 September.
  • The deadline for filing any appellant’s notice pursuant to rule 52.12(2) of the Civil Procedure Rules 1998 is extended to Friday 9 October. (This is an application by a person applying directly to an appeal court (as opposed to the High Court here) for permission to appeal.)

We will publish the sealed order of the court when it is available. [Update on 20 October: we have now published the 15 October order.]

We will publish any documents referred to in the bullet points above, to the extent that we are permitted to, when they are available.
18 September 2020

Dear CEO letter on expectations of insurers

Following the judgment from the High Court, we have issued a Dear CEO letter outlining our expectations of insurers following the judgment.

Consequentials hearing

The Court has confirmed that the consequentials hearing will take place on 2 October, where the Court will hear submissions from the parties on the appropriate declarations to be made by the Court in the light of the judgment and on any applications for appeal.

We will confirm the time of the hearing (probably 10:30) and publish details of the live-stream on this webpage when available.
15 September 2020

Publication of judgment and FCA press release

We have published the judgment in the test case, which has just been handed down by the High Court.

We have also issued a press release on the judgment.

Summary of judgment

The judgment is complex and runs to over 150 pages. Our legal team at Herbert Smith Freehills have published a summary on their website.

Consequentials hearing

A hearing will shortly be fixed with the High Court, where any applications for appeal will likely be made. The court has agreed to live-stream this hearing if it is heard remotely. We will publish the hearing date and details of the live-stream on this webpage when available.

Next steps for policyholders

Every policyholder who has made a claim or complaint that is potentially affected by the judgment should receive an update from their insurer within 7 days.

In the meantime, the test case does not prevent policyholders making or settling any claim under their business interruption policy, making a complaint to their insurer if they are dissatisfied with the outcome, and referring their complaint to the Financial Ombudsman Service.

Complaints referred to the Financial Ombudsman Service

Policyholders with complaints at the Financial Ombudsman Service that are potentially affected by the judgment should await further information from the Ombudsman. The Ombudsman has published information on business interruption insurance complaints on its website.

Invitation to speak to our legal team

Our legal team has set aside time on 21 and 22 September to speak directly with as many policyholders and intermediaries and their legal advisers as reasonably possible, given the time constraints.

We will consider meeting requests made to us by 5pm on Thursday 17 September.

Please email: [email protected] stating only the word 'Meeting' in the subject line of the email and stating your availability in the body of the email. If you would like to talk about a particular policy, please email the policy document to us as well as correspondence from your insurer regarding whether your claim is potentially affected by the test case.
9 September 2020

Future handing down of judgment

The court has stated that judgment will be handed down at 10:30am on Tuesday 15 September 2020.

We will publish the judgment on this webpage once it has been handed down.
18 August 2020

Publication of final transcripts

We have published:
3 August 2020

Publication of draft transcript and Supplementary Notes

We have published: 
31 July 2020

Conclusion of the trial 

The trial has now concluded and judgment is awaited. We have amended this page above, including with information about what happens next.

Publication of draft transcript 

We have published the draft transcript of day 7 of the trial.
30 July 2020

Publication of draft transcript 

We have published the draft transcript of day 6 of the trial.
29 July 2020

Publication of draft transcript 

We have published the draft transcript of day 5 of the trial.
27 July 2020

Publication of draft transcript 

We have published the draft transcript of day 4 of the trial.
24 July 2020

Publication of draft transcript and Agreed Facts 3

We have published the draft transcript of day 3 of the trial.

We have also published Agreed Facts 3 – Prevalence of Covid-19.
23 July 2020

Publication of draft transcript

We have published the draft transcript of day 2 of the trial. 
22 July 2020

Publication of draft transcript 

We have published the draft transcript of day 1 of the trial. 
17 July 2020

Publication of further documents for trial  

We have published below a number of other documents which will be used as part of the trial commencing on Monday 20 July.  

The Agreed List of Issues and Common Ground summarises what is and is not in dispute between the parties. This supersedes the Questions for Determination.

The Agreed Facts are sets of facts, with supporting evidence, which the parties have now agreed and which are necessary to resolve the issues in dispute:   

The new Assumed Facts document contains factual scenarios which some parties will use in the trial to illustrate their views as to how coverage is triggered. These have developed out of the previous Assumed Facts document, as a result of discussion and agreement between the parties.  
15 July 2020

Publication of Defendants’ skeleton arguments 

We have published the Defendants’ skeleton arguments (written submissions) for trial:

We have also published the Defendants’ joint skeleton argument on the principles of contractual construction (interpretation) and Defendants’ joint skeleton argument on causation (of loss). 

Trial to commence Monday 20 July 

Those who wish to view the trial are reminded that it is to take place over 8 days, on 20-23 July and 27-30 July. The starting time can be checked on the final court listing after 4.30pm on the day before each day’s sitting.

We have published the trial timetable. 

In order to view the trial live:

  • click on the following link, which will become live just before each day’s sitting starts https://fl-2020-000018.sparq.me.uk/
  • you do not need any specialist software to view the live-stream
  • please note that you must not record the live-stream

Publication of court order

Following the Case Management Conference on 26 June, we have published the sealed court order made.

List of affected insurers and policies

On 17 June 2020 we published Finalised Guidance for insurers in relation to the test case. We asked insurers to review relevant non-damage business interruption policies to determine whether the outcome on claims generally (including questions of causation of loss) may be affected by the final resolution of the test case. We asked insurers to provide us with their findings.

We have published the list of affected insurers and policies that were submitted to the FCA as part of this process. 

The policies listed cover approximately 370,000 policyholders.  

Insurers have been requested to update the FCA as the case develops on the outcome of this review. We will update the list to reflect any updated reviews as appropriate.
13 July 2020

Publication of skeleton arguments

We have published the FCA’s and Interveners’ skeleton arguments (written submissions) for trial commencing on 20 July: 

Other publications

We have also published:
3 July 2020

Publication of Reply 

The FCA has now served its Reply, which sets out its response to the Defences.  

Since 24 June we have received more than 90 detailed submissions from policyholders and other stakeholders on the Defences. We considered these when drafting the Reply. We also conducted numerous meetings with policyholders and other stakeholders as part of this process.  

Other publications

We have also published:
30 June 2020

Order from second Case Management Conference on 26 June 

At this hearing, Lord Justice Flaux and Mr Justice Butcher gave various directions relating to how the test case is to proceed, including that:

  • The Hospitality Insurance Group Action and the Hiscox Action Group were permitted to intervene in the test case. Each may file written submissions and make brief oral submissions at the hearing in July.
  • Certain facts have been accepted as 'Agreed Facts' for the purposes of the test case.
  • Royal & Sun Alliance Insurance Plc was not permitted to rely on factual evidence about a policy wording which was outside the Representative Sample.
  • The FCA was not permitted to rely on expert evidence in relation to two policy wordings of Ecclesiastical Insurance Office Plc. In particular, this concerned a list of ‘specified diseases’ which the FCA’s evidence suggested were unlikely to lead to a widespread outbreak in the UK.
  • The FCA was permitted to amend its Particulars of Claim in relation to the prevalence of Covid-19 in the UK. The FCA has agreed that it will revert to the Court by Friday 3 July to indicate if it wishes the Court to reserve time in the new Commercial Court term starting in September for the determination of issues related to the under-recording of the prevalence of Covid-19 in the UK.
  • Various procedural matters were decided, such as timing of written submissions, and sequence of oral submissions at the hearing in July. The first 3 days of the hearing in July were allocated to the FCA and Interveners, the next 4 days to the Defendants, and the last day to the FCA and Interveners.

We have published a draft, provisional transcript for the hearing, and will publish the final approved transcript as well as the court order when they are available. 

Transcript of first Case Management Conference on 16 June 

We have published the final approved transcript of this hearing. 
24 June 2020

Publication of court order

Following the Case Management Conference on 16 June, we have published the sealed court order made.

Publication of Defences 

The Defendants to the test case have now served their Defences. These state each Defendant’s written case, in response to the FCA’s Particulars of Claim. We have published each Defence below: 

Invitation to comment on the Defences

The FCA’s Reply, which is the written response to the Defences above, is due on 3 July. The FCA’s skeleton argument (written submissions) for the final hearing is due after that. We are inviting policyholders, their insurance intermediaries, other stakeholders and their legal advisers to provide comments on the Defences, which we will consider when drafting our Reply and skeleton argument.

What we are asking for:

  • We are inviting comments specifically on the Defences published above, and encourage you to specify which paragraph of which Defence you are commenting on.
  • Comments might also include alerting us to specific clauses or wording in your policy (as long as that policy is already part of the test case) or in correspondence you have received from a Defendant, perhaps because they are inconsistent with the interpretation put forward in a Defence.
  • We are not inviting requests for particular policies to be added to the test case at this stage.

The earlier you can send your comments the better. We will consider comments provided to us by 3pm on Monday 29 June.  

Please email: [email protected] stating only the word ‘Defences’ in the subject line of the email.

Where you are a member of an action group pursuing action against an insurer or of a relevant trade body, please could you also identify this clearly in the body of the email.

We will contact you if we have any queries in relation to the comments raised, but we will not be able to respond individually to all emails sent to this email address.

Invitation to speak to our legal team

Our legal team has set aside time on 30 June and 1 July to speak directly with as many policyholders and intermediaries and their legal advisers as reasonably possible, given the time constraints.

We will consider meeting requests made to us by 5pm on Friday 26 June.    

Please email: [email protected] stating only the word 'Meeting' in the subject line of the email and stating your availability in the body of the email.
17 June 2020

Order from first Case Management Conference on 16 June 

At this hearing, Mr Justice Butcher made an order relating to how the test case is to proceed, including that:

  • the case will be expedited (heard urgently) in accordance with the timetable above
  • the Financial Markets Test Case Scheme will apply
  • the second Case Management Conference and final hearing will be live-streamed (details below)

We will publish a copy of the court order and transcript for the hearing once they are available.

Link to live-stream future hearings

The court has agreed to live-stream the second Case Management Conference on 26 June and the final hearing starting on 20 July. The starting time for these hearings can be checked on the final court listing after 4.30pm on the day before each hearing.

In order to view these hearings live:

  • click on the following link, which will become live just before the hearing starts: https://fl-2020-000018.sparq.me.uk/
  • you do not need any specialist software to view the live-stream
  • please note that you must not record the live-stream

Notice to non-parties in the test case

In accordance with the order of Mr Justice Butcher on 16 June, notice is given that any non-party wishing to make an application under paragraph 2.5 of Practice Direction 51M should make any such application by 5pm on 24 June 2020 on notice to all parties to the litigation, any such application to be returnable at the Second CMC.  

'Returnable at the Second CMC' means that any such application will be heard at the second Case Management Conference on 26 June 2020.  

Finalised Guidance and Feedback Statement published

We have published Finalised Guidance setting out our expectations for insurers and insurance intermediaries when handling claims and complaints for business interruption policies during the test case brought by the FCA.  

We have also published a Feedback Statement summarising the feedback received on our draft guidance published on 1 June 2020. 
15 June 2020

Details of first Case Management Conference on 16 June

The first Case Management Conference before a Judge is now confirmed to take place on 16 June from 10.00am (or 10.30am depending on final court listing which can be checked after 4.30pm on 15 June 2020 by clicking here) to 4pm. At this hearing, the Judge will be invited to consider our application for expedition and admission to the Financial Markets Test Case Scheme, fix the timetable for the case (including the date for the court hearing in the second half of July) and deal with other procedural matters.

The court has agreed to live-stream this hearing. In order to view the hearing live:

  • click on the following link, which will become live just before the hearing starts: https://fl-2020-000018.sparq.me.uk/
  • you do not need any specialist software to view the live-stream
10 June 2020

Start of proceedings in the High Court

We have started proceedings in the High Court and published the court documents  related to this: 

  • Claim Form, which is a procedural document initiating legal proceedings and summarising what we are seeking.
  • Particulars of Claim, which is the FCA’s ‘pleading’ in the case, setting out our claim in writing. 
  • Representative Sample of Policy Wordings, which are a selection of policy wordings which the FCA believes captures the majority of the key issues that could be in dispute. Read a tracked changes version so that you can see how this document has developed to date from the proposal published on 1 June 2020 (which is also available below).  
  • Assumed Facts (or 'fact patterns'), which are a set of illustrative factual assumptions, for example the nature of the affected business(es), how they were affected by the pandemic and whether they closed entirely or partially (and why). These are a menu of potential fact patterns to assist the court, and not all of the assumed facts will be applied to all of the representative sample of policy wordings. Read a tracked changes version so that you can see how this document has developed to date from the proposal published on 1 June 2020 (which is also available below). 
  • Questions for Determination by the court, which are a list of potential questions arising from insurers’ reasons for denying claims, and which have informed the FCA’s Particulars of Claim. Read  a tracked changes version so that you can see how this document has developed to date from the proposal published on 1 June 2020 (which is also available below). 
  • Issues Matrix, which shows which questions for determination by the court are engaged by each policy in the representative sample. Read a tracked changes version so that you can see how this document has developed to date from the proposal published on 1 June 2020 (which is also available below). 

We have updated the initial list of affected insurers and the policy wordings they use to reflect the changes to the Representative Sample of Policy Wordings. Read a tracked changes version so that you can see how this document has developed to date from the proposal published on 1 June 2020 (which is also available below). As stated in the 1 June 2020 update , this list is not exhaustive, and our expectation remains to publish a list of all the relevant insurers and wordings that may be impacted by the test case in early July.

How we have engaged with stakeholders since 1 June

Since 1 June we have received more than 270 submissions from policyholders and other stakeholders on our proposed Questions for Determination and other documents relating to the scope of the test case that we published on 1 June. We and our advisers, Herbert Smith Freehills, have also conducted more than 45 consultations with policyholders and other stakeholders. We have taken account of the comments we received in formulating our Particulars of Claim and the other documents we published today. In particular:

  • A number of policyholders asked what the judgment in the test case would mean for their claim. We have set out information about this on this website under the heading “What the test case will decide” above.
  • A number of policyholders asked why certain policy wordings were not being tested. The policy wordings we have selected are those which are representative of the key arguable issues on the basis of securing the maximum relevant coverage for relevant policies while minimising the number of parties engaged before the court. This is in order to make the process as swift as possible while providing as much clarity as possible.
  • The comments received from stakeholders have influenced the way the FCA has put its case in the Particulars of Claim, including in relation to certain causation points, what amounts to “prevention” and “interference”, and the correct application of “trends clauses”.
  • We have amended where necessary the documents appended to the Particulars of Claim (Questions for Determination etc, see above).

Application for expedition

We have also published the documents  relating to our application that the test case be heard urgently, and as part of the Financial Markets Test Case Scheme (which is a scheme for financial claims raising issues of general importance that require immediate court guidance): 

  • Application Notice, which is a procedural document initiating the application and summarising what we are asking for. 
  • Witness Statement, which is the FCA’s evidence in support of the application.
  • Draft Order, which is the order we are asking the court to make in respect of this application.

First case management conference

The first Case Management Conference before a Judge is expected to take place on 16 June (TBC) . The Judge will be invited to consider our application for expedition and admission to the Financial Markets Test Case Scheme, fix the timetable for the case (including the date for the court hearing in the second half of July) and deal with other procedural matters.

We intend to ask the Judge to agree to live-stream this hearing, and will provide a further update on this as soon as we can. 

Next invitation to provide comments – c.23 June 

We expect to issue a further invitation to policyholders and other stakeholders to provide us with comments shortly after 23 June, when the insurer parties in the test case file their Defences. This will help us ensure that stakeholder comments are reflected in our Reply and skeleton arguments (written submissions) prepared for the final court hearing. 

Update to our Policyholder Engagement Statement

We have updated our Policyholder Engagement Statement, including to refer to our privacy notice  for information on how and why we handle any personal data sent to us. 
1 June 2020

We announced that we 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 we have invited, and have agreed, to participate in the proceedings.

The initial list of insurers and the policy wordings they use is not exhaustive, and we published a short consultation on draft guidance asking all insurers to check their policy wordings against those we intend to test to see if theirs will be impacted by the outcome of the case. We said our expectation was to publish a list of all the relevant insurers and wordings that may have impacted policies in early July.

The consultation on draft guidance also set out the FCA’s expectations of all firms handling BI claims and any related complaints between now and the court decision.

We also published 4 key documents, which we intend to invite the Court to consider and would therefore form the basis of the test case:

  • Proposed Representative Sample of Policy Wordings, which are a selection of policy wordings which the FCA believes captures the majority of the key issues that could be in dispute. How we arrived at these is explained in the press release
  • Proposed Assumed Facts (or 'fact patterns'), which are a set of illustrative factual assumptions, for example the nature of the affected business(es), how they were affected by the pandemic and whether they closed entirely or partially (and why). These are a menu of potential fact patterns to assist the court, and not all of the assumed facts will be applied to all of the representative sample of policy wordings
  • Proposed Issues Matrix, which shows which questions for determination by the court are engaged by each policy in the representative sample
  • Proposed Questions for Determination by the court, which are a list of potential questions arising from insurers’ reasons for denying claims, and which will inform the FCA’s Particulars of Claim

Invitation to comment on our documents

We invited policyholders, their insurance intermediaries, insurers, other stakeholders and their legal advisers to provide their comments on these documents by 3pm on Friday 5 June.

We also invited comments on these documents from the insurers who will be the parties to the test case.

Invitation to speak to our legal advisers

We invited policyholders and intermediaries to have consultations with our legal team at Herbert Smith Freehills on 3 and 4 June.
15 May 2020

We invited policyholders of BI insurance who are in dispute with their insurers over the terms of their policies to send us their arguments by 20 May 2020 if they wished us to take them into account as part of the test case. In particular, we asked for:

  • policyholders’ (or their representative’s) arguments as to why it was considered cover should be available in cases where it was considered insurers had not responded appropriately to a claim
  • the wording of the policy that has not responded
  • brief relevant facts of the case

We needed policyholders’ arguments urgently in line with the FCA’s intention to seek the court’s view on relevant policies as soon as possible, and we said we would consider all arguments and information raised to us by 20 May 2020. We are taking those arguments into account as part of the test case.

We also provided a link to sign up to receive email updates.
1 May 2020

We issued a statement setting out our intention to obtain court declarations aimed at resolving the contractual uncertainty around the validity of many BI claims. We explained we are intending to take this action in the public interest to advance our consumer protection and market integrity objectives, with the aim of obtaining legal guidance more quickly and at lower cost to policyholders than would be the case if they took their own actions.

Alongside our statement, we asked insurance companies for information on their BI policies and wordings, and their intentions and decisions in relation to claims on these policies by 15 May 2020. We are using this information to consider, with external counsel, which policies we will seek to achieve a declaratory judgment on through the courts. We want a representative sample of wordings to give as much clarity as possible, whilst recognising that the need for an expedited court process means we can’t achieve clarity on every different wording. We are not yet in a position to definitively identify which policy wordings, or indeed firms, may be included in proceedings.
15 April 2020

We wrote to all chief executives of insurance firms. This Dear CEO letter outlined our expectations of firms with regard to the settlement of BI claims and the need to assess and settle claims quickly.
19 March 2020

We set out our expectations for insurance firms. This outlined our expectation that firms should consider very carefully the needs of their customers and show flexibility in their treatment of them.

Page updates

13/04/2021: Information added BI insurance update, 13 April 2021 latest extract of BI claims
22/03/2021: Information added Insurer claims data
12/03/2021: Information added List of policies capable of responding to Covid-19
03/03/2021: Information added Finalised guidance and feedback statement: Proving the presence of coronavirus (Covid-19)
15/02/2021: Information added Update to test case: Submissions to the Supreme Court on the declarations
29/01/2021: Information added Policy checker and FAQs
22/01/2021: Information added Dear CEO letter on expectations of insurers
15/01/2021: Information added Publication of the judgment from the Supreme Court
12/01/2021: Information added Update on timing of the judgment from the Supreme Court
15/12/2020: Information added Update on timing of the judgment

03/08/2020: Information added Publication of draft transcript of day 8 and Supplementary Notes from certain parties

31/07/2020: Information added Update following conclusion of the trial and publication of draft transcript of day 7

30/07/2020: Information added Publication of draft transcript of day 6 of trial

29/07/2020: Information added Publication of draft transcript of day 5 of trial

27/07/2020: Information added Publication of draft transcript of day 4 of trial

24/07/2020: Information added Publication of draft transcript of day 3 of trial and Agreed Facts 3

23/07/2020: Information added Publication of draft transcript of day 2 of trial

22/07/2020: Information added Publication of draft transcript of day 1 of trial

20/07/2020: Information added Updating Defendants’ skeleton arguments with cross-referenced versions

17/07/2020: Information added Update on test case including publication of further trial documents

15/07/2020: Information added Update on test case and Defendants’ skeleton arguments published

13/07/2020: Information added Update on test case and FCA’s skeleton argument published

03/07/2020: Information added Update on test case and Reply published

30/06/2020: Information added Update on test case after second Case Management Conference

24/06/2020: Information added Update on test case and defences published

17/06/2020: Information changed Update on test case

15/06/2020: Information added Update on test case

10/06/2020: Information added Update on test case

01/06/2020: Information added Update on test case and draft guidance consultation