On 1 June 2020, the Financial Conduct Authority (FCA) provided an update on the progress of its test case on the validity of business interruption insurance claims. The update also provides a representative sample of 17 policy wordings that capture the majority of the key issues that are likely to be in dispute. Insurers had until 3 June 2020 to comment on the sample wordings. The FCA states in its update that the list of insurers and sample wordings are not exhaustive. In addition to the sample wordings, the FCA has also published proposed assumed facts (for example, the types of business and how they responded to the pandemic), a proposed issues matrix and proposed questions for determination by the court. Comments on these documents from other insurers and policyholders are invited by 3pm on Friday 5 June.
The insurance companies that will be participating in the case have entered into a framework agreement governing the process and timetable for the case. The timetable states that the FCA will file and serve a Claim Form in the Commercial Court on 9 June. Skeleton arguments should be served in early July before the case is heard over 5-10 days in the second half of July.
The framework agreement states that the matters to be determined in the proceedings are the correct interpretation and application of the terms in relation to agreed and assumed facts including:
- whether on the agreed facts and assumed facts the policies provide cover in principle; and
- whether on the agreed facts and assumed facts the policyholders of the policies can establish the necessary causal link (as a matter of the application of the law and the wording of the policies) between the assumed losses sustained by policyholders and any relevant peril, event or circumstance that is covered by relevant terms in the policies, including to take into account the relevance of a trends clause or similar provision.