There have been further developments in the FCA’s test case concerning business interruption (“BI”) insurance. Details have just been published on the FCA’s website.

Insurers’ Defences

Insurers’ Defences to the FCA’s Particulars of Claim have been now served and are available to view on the website.

Numerous policy coverage arguments have been raised by the various insurers in those Defences including:

• With regard to BI policies that insure against business closures caused by the presence of an infectious disease within a certain radius of the insured premises, insurers say that neither the COVID-19 pandemic, nor the Government’s national reaction to it, without reference to (or reliance upon) a specific case or cases of COVID-19 within the relevant radius, will be sufficient to trigger policy coverage.
• Some of the insurers argue that the pandemic is a global or national issue which should not be covered under these policies, rather than a local issue that might be covered. And if there was a case of COVID-19 within the radius of the insured premises, then the insured must show that this was the specific (or “proximate”) cause of the BI claimed for under the policy in question
• Whilst Government restrictions may have been imposed upon businesses, many of them were technically allowed to stay open. One insurer relies on a list of such businesses including restaurants being permitted to operate take-away services, food retailers and other essential services being expressly permitted to remain open by the Government and other retail businesses being able to continue to trade virtually or by distance means.
• Elaborating on the so called “Swedish defence” that we reported on in our blog post on the most recent CMC in the case, some insurers argue that businesses would have suffered financial losses as a result of the prevalence of COVID-19 in the UK with or without the Government’s lockdown.
• Other insurers maintain that the policy wordings in question are unambiguous, and should not be interpreted against the interests of the insurer, and in favour of the insured, as the FCA has submitted.
• Some insurers are seemingly looked to lay off the blame on to the insureds’ brokers who the insurers argue owed a duty to the insureds to advise on the suitability of the insurance being obtained

Case Developments

There is a further Case Management Conference today at which the Court will deal with any outstanding procedural matters to ensure that the case is ready for trial on 20 July 2020, with the FCA due to serve it’s Reply to the insurers’ Defences by 3 July 2020.

In the meantime, the FCA has invited interested parties, such as policy holders and intermediaries, to comment on the insurers’ Defences. The FCA says it will consider any comments when preparing it’s Reply and skeleton argument for the trial. Noteworthy here is the FCA’s request:

“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”.

The FCA has asked for comments by 3pm on 29 June.

Other news

In separate developments, the Hiscox Action Group (made up of more than 400 small business owners with BI claims against Hiscox) has formally applied to intervene in the FCA’s test case. They say that Hiscox has not yet agreed to an accelerated process for the arbitration claim designed to resolve the dispute and that their voices should be heard in the FCA test case.

It remains to be seen whether the Court will allow such an intervention with the application due to be heard at today’s Case Management Conference.