The Supreme Court Ruling for FCA Business Interruption Insurance Cases

By Kyte Ekstrom | Compliance, Financial Industries, FinTech, Insurance, News, Uncategorized | 0 Comments

If, like most insurance brokers, advisors and policyholders, you’ve been waiting with bated breath to find out the outcome of the business interruption insurance appeal. The wait is finally over. Depending on your perspective, you can either, finally take a sigh of relief, or exhale in exasperation as you read on.

The Supreme Court handed down its judgement (on the 15th of January), substantially allowing the FCA’s appeal and dismissing the Insurers’ appeals. In doing so, the Supreme Court has developed the law of concurrent causation and overturned the Orient Express case; a leading authority on BI insurance claims.

The court addressed the issues arising on the appeals of the FCA in relation to the following six areas:

  1. The interpretation of ‘disease clauses’.
  2. The interpretation of ‘prevention of access’ clauses.
  3. The question of what causal link must be shown between business interruption losses and the occurrence of a notifiable disease.
  4. The effect of ‘trends clauses’.
  5. The significance in quantifying business interruption losses of effects of the pandemic on the business which occurred before the cover was triggered.
  6. In relation to causation and the interpretation of trends clauses, the status of the decision of the Commercial Court in Orient-Express Hotels Ltd v Assicurazioni  Generali SpA .

The Supreme Court judgement completes the legal process for impacted policies and means that insurers will need to pay policyholders for their coronavirus claims.

The FCA will follow up by publishing a set of Q&As for policyholders to assist them and their advisers in understanding the test case, and will also publish a list of BI policy types that are potentially affected by this judgment. The FCA will also keep its dedicated webpage updated in order to keep policyholders informed with updates as they arise.

FCA: Business Interruption Insurance Webpage

The FCA’s Dear CEO Letter Dated 22nd January 2021 outlines the FCA’s expectations of insurers following the judgment.

What you should do?

Get in touch to speak to one of our dedicated advisors. Our Adhoc Comply service is the ideal solution for reviewing the BI insurance policies you’ve sold; policy types and applicable clauses, to ensure that you are fulfilling your client obligations. Our Adhoc Comply service is here to assist you with one-off issues which require efficient and effective resolution.

Fintech Compliance is the only compliance consultancy in the UK to specialise exclusively in fintech, meaning we understand your business and your needs. Our dynamic team all hold industry qualifications and are up to date with the latest compliance regulations regarding all spheres of technology based, and alternative finance companies.

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