The Hearing

On the 15th of January, The Supreme Court handed down it’s judgement on the high profile FCA Covid-19 Business Interruption Test Case Appeal.

This followed previous hearings at the High Court and the Commercial Courts.

This judgement is the result of the four day hearing that started on November 16 after six insurers – Arch Insurance, Argenta, Hiscox, MS Amlin, RSA, and QBE UK and a policyholder action group joined the FCA on the appeal, which seeks to clarify whether policy wordings cover the Business Interruption caused by the nationwide coronavirus lockdown last March.

What was discussed

The hearing spent a lot of time discussing the nuances of the Business Interruption sections of the above companies wordings. This included: Causation, Aggregation, Triggers, Hybrid and Prevention of Access Clauses, Quantum, Separate Occurrences and much more.

My intention is not to list the discussions or findings, as this would be a very long post. I want to provide some simple guidance for customers who are unsure what it all means.

What does this mean for your business? 

Can I now make a claim or have a previous declined claim overturned? – If you are insured by one of the companies mentioned, and you have an actual loss, then maybe. I say maybe because all claims are individual and without knowing your personal circumstances, it is hard to comment on your potential success of claiming. Also, not all of the wordings for the Insurers listed have been overturned.

The way your claims are calculated may have been effected too. If you have a successful claim you may find that some of the clauses used to reduce the awarded amounts have been overturned.

My companies profits were unaffected, can I still claim? – No. Despite what the press may lead you to believe, this is not the same as the PPI Complaints. There is no suggestion of mis-selling. If you have not made a loss you will not be able to make a claim.

My Insurers were not listed, does this mean they now have to pay up? – The test cases looked at a broad section of policy wordings meant to show a good cross section of all policies. Of all the policy wordings looked at, only wordings of the Insurers listed were overturned. If you have had a claim declined by another insurer its highly unlikely their decision has changed.

Can I protect my Business against a future Pandemic?– ‘Pandemic Cover’ or cover intended to indemnify against this kind of situation, has only really been available for very large companies and carries very large premiums. Chances are that if SME Insurers did offer it as an extension (before we all knew what a ‘Global Pandemic’ looked like) the take up would have been very minimal as the premiums would have been so high.

Even Insurers who’s wordings were already robust enough to protect their intentions, have now added even more specific ‘Pandemic’ type clauses, so it is highly unlikely you will be able to protect your business against these types of losses in the future.

Summary

Insurance policies are a contract in which Insurers set out pre agreed intentions of what losses they will and will not pay for as a result of specific occurrences.

The vast majority of SME policies were very clear about their intentions to exclude cover for such an event as this – this includes the Insurers under scrutiny. The difference for the policies discussed in the Supreme Court hearing is that although their intentions were noted, it was thought the words they used were effectively not clear enough, this left them exposed to pay for losses they did not really intend to cover against.

What Next?

The FCA have issued this full list of policy wording sections discussed and also a ‘Dear CEO Letter’ to further explain the situation.

If you feel that you may have had a claim declined that now should be upheld or you now feel that you should make a claim, we suggest you should speak to your Broker or Insurers quickly. The FCA has said that Insurers should not penalise you for making a late claim, but we feel that your window for opportunity may be small.

As a small business our selves we know how difficult this last year has been and we are pleased that some companies have been handed a life line, albeit against their Insurer’s intentions.

If you are not sure if you can claim or if you would like us to look over your existing covers, please contact Church Side Insurance on info@onyx.email or 01623 650232

Author: Dean Parrish of Onyx Brokers Ltd, these views are personal interpretation as a result of seeking professional advice but are not necessarily the views of Onyx Brokers Ltd