As we explained in our earlier post, in a decision that could influence how policyholders and insurers around the world address business-interruption coverage for COVID-19 losses, the London High Court recently handed down its much-anticipated judgment in the Financial Conduct Authority’s “Test Case,” The Financial Conduct Authority (FCA) v. Arch et al.  Because the judgment provided that coverage was available for COVID-19 business-interruption losses under most of the policy wordings at issue, it was highly anticipated that the insurance companies at issue would challenge the judgment in a fast-tracked “leapfrog” appeal to the Supreme Court of the U.K., expected to be heard by the end of the year.  Yesterday, however, six of the insurance companies subject to the judgment decided not to pursue an appeal in connection with some of the policies, and one of the insurers stated that it would instead begin to make payments where appropriate.

The insurance companies’ decision to drop the appeal marks yet another win for policyholders.  It shows first that coverage exists for business-interruption losses caused by the COVID-19 pandemic under business-interruption policies, thus belying the insurance industry assertions that such coverage “could not apply.”  In addition, it shows that insurers are now willing to pay for such losses in at least some cases, as opposed to litigating in court at the appellate level where they might risk bigger exposures.