FCA Business Interruption Test Case Update

Tue Sep 15 2020

As many members will already be aware, the judgement in the UK’s Financial Conduct Authority (FCA) business interruption test case was handed down on 15 September 2020 and the FCA has published the judgement on its website. Herbert Smith Freehills, the firm which acted for the FCA in the test case, has published a useful summary of the judgement on its website, which may also be viewed here.

Following expedited proceedings, the judgment brings highly-anticipated guidance on the proper operation in the UK of cover under certain non-damage business interruption insurance extensions. The judgement may be of persuasive effect for cases coming before the Courts in Ireland. Whilst different conclusions were reached in respect of each wording examined by the Court, the Court found in favour of the FCA on the majority of the key issues, in particular in respect of coverage triggers under most disease and ‘hybrid’ clauses, certain denial of access/public authority clauses, as well as causation and ‘trends’ clauses. The judgment should therefore bring welcome news for a significant number of the thousands of policyholders impacted by COVID-related business interruption losses.

The FCA has noted that a hearing will be fixed in the High Court in the UK, where applications for appeal are likely to be made. Brokers Ireland will be following developments in this case with interest, with a view to providing advice to members.

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