Judgement in UK COVID-19 business interruption test case

Christopher Woolard, Interim Chief Executive of the FCA, said, “We brought the test case in order to resolve the lack of clarity and certainty that existed for many policyholders making business interruption claims and the wider market.”

Paul Lewis, partner and Global Head of Insurance Disputes at Herbert Smith Freehills, who led the case believes that this is a really significant judgment.

He said, “The decision should bring welcome news to a significant number of policyholders who will need to read the judgment carefully and see how the principles laid down by the Court apply to their particular policy wording.”

Woolard added, “Insurers should reflect on the clarity provided here and, irrespective of any possible appeals, consider the steps they can take now to progress claims of the type that the judgment says should be paid.  They should also communicate directly and quickly with policyholders who have made claims affected by the judgment to explain next steps.”

Association of British Insurers Director-General, Huw Evans, said, “This is a complex judgment spanning 162 pages and 19 policy wordings and it will take a little time for those involved in the court case to understand what it means and consider any appeals. Individual insurers will be analysing the judgment, engaging with the regulator, taking account of the appeal process and keeping their customers informed in the period ahead.”

“Insurers always regret any contract dispute with their customers and will continue to reflect on feedback from recent events.”



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