Business interruption insurance

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.

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

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.

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.

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.

Publication of final transcripts

We have published:

• The final transcript of day 1 of the trial
• The final transcript of day 2 of the trial
• The final transcript of day 3 of the trial
• The final transcript of day 4 of the trial
• The final transcript of day 5 of the trial
• The final transcript of day 6 of the trial
• The final transcript of day 7 of the trial
• The final transcript of day 8 of the trial

Publication of draft transcript and Supplementary Notes

We have published: 

• The draft transcript of day 8 of the trial 
• The Supplementary Note of Argenta Syndicate Management Ltd
• The Supplementary Note of Ecclesiastical Insurance Office Plc and MS Amlin Underwriting Ltd 
• Supplementary Note 1 of Hospitality Industry Group Action 
• Supplementary Note 2 of Hospitality Industry Group Action

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.

Publication of draft transcript 

We have published the draft transcript of day 6 of the trial.

Publication of draft transcript 

We have published the draft transcript of day 5 of the trial.

Publication of draft transcript 

We have published the draft transcript of day 4 of the trial.

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.

Publication of draft transcript

We have published the draft transcript of day 2 of the trial. 

Publication of draft transcript 

We have published the draft transcript of day 1 of the trial. 

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:   

• Agreed Facts 1 – Chronology of Government Response to Covid-19 in the UK
• Agreed Facts 2 – Covid-19 Disease  
• Agreed Facts 3 – Prevalence of Covid-19
• Agreed Facts 4 – Restrictions, guidance, advice and other information provided to the public  
• Agreed Facts 5 – Notification Procedure  
• Agreed Facts 6 – Sweden  
• Agreed Facts 7 – Earlier Pandemics   
• Agreed Facts 8 – Economic Impact  
• Agreed Facts 9 – Distribution Channels  
• Agreed Facts 10 – Scilly Isles  

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.  

Publication of Defendants’ skeleton arguments 

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

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

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.

Publication of skeleton arguments

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

• FCA’s skeleton argument 
• Hospitality Insurance Group Action skeleton argument 
• Hiscox Action Group skeleton argument 

Other publications

We have also published:

• the court’s ruling for the second Case Management Conference on 26 June
• the final approved transcript for the second Case Management Conference on 26 June 
• the Amended Defence of Hiscox Insurance Company Ltd

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:

• the FCA’s Amended Particulars of Claim
• the Amended Defence of Royal & Sun Alliance Insurance Plc
• the court’s ruling from the Case Management Conference on 16 June

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 Intervenors, the next 4 days to the Defendants, and the last day to the FCA and Intervenors.

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. 

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: 

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

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.

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.  

View Practice Direction 51M, a part of the Civil Procedure Rules 1998. '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. 

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

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. 

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.

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.

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.

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.

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.