On 15 September the court gave its judgment in the FCA BI test case. The case was brought in order to resolve some uncertainties relevant to insurers’ liability for Business Interruption (BI) insurance claim.
FCA BI test case

Eight insurers took part in the case, with 21 policy wordings under scrutiny. The case’s outcome will also impact the wider group of insurers with similar wordings (and in turn may affect a broad number of policyholders).

While it recognised that there may be appeals on some or all the points decided, the court found in favour of many of the arguments advanced for policyholders by the FCA on the majority of the key issues. This brings potentially positive news for our clients that have been affected by COVID-19.

However, the judgment is detailed and deals with many subtle issues. Each policy’s wording will need to be carefully considered against the detail of the court’s analysis then considered against the particular and probably unique set of facts and circumstances relating to each policyholder’s claim to work out what it means in each instance.

Here is a link to the FCA statement which also includes a link to the full judgement

Next steps

There is the possibility that either or both the FCA and one or more insurers may seek permission to appeal all or part of the judgment – indeed in its judgment the court anticipated the possibility of an appeal. We expect to know about any intention to appeal in the next few weeks. We expect that in that event, further details and the date of an appeal hearing will be published on the FCA website’s dedicated pages.

We are currently assessing the judgment and will be discussing this with insurers to understand what this means for our affected clients.

In line with guidance published to insurers in June, all insurers with wordings to which the test case was relevant are expected within seven days of the judgment to contact affected policyholders who have made claims which have not yet been settled in order to inform them about the test case and its implications for their claim or complaint. In some cases the insurer’s communication will come via Gallagher and in some cases direct from the insurer.

Gallagher will naturally be supporting our clients as this process continues. Clients with any questions should get in touch with their usual Gallagher representative.