Bulletin 10: FCA High Court judgement – A rich vein of opportunity…

The eagerly awaited outcome of the High Court’s judgment in the FCA Test Case has yielded a rich vein of opportunities for clarity and future treatment of BI insurance cover.

For policyholders it makes for much better reading than some commentators had forecast. Clearly, it is not over yet because an Appeal seems inevitable but the FCA has kept its foot on the pedal with insurers and there are signs that the Court and indeed the lawyers are willing to expedite an Appeal to reach more certainty. Let’s hope so.

It is evident from the judgment that the court has taken the view that the cover for the Peril, as defined, must contemplate ‘what is likely to happen on the discovery of an ‘event’ caused by the Peril, which would directly or indirectly interrupt the business.’ That is an important take away from the trial.

The overarching outcome of the FCA initiative’s test case is an unprecedented dissection of the ‘meaning’ of the chosen 21 policies, which are estimated to have an impact on over 700 types of policies amongst some 60 insurers affecting some 370,000 policyholders. The judgment, albeit long and complex, is well set out, each insurer’s policies being ‘sliced and diced’ one at a time and in the same comparative sequence in each case. It makes for invaluable reading for insurance professionals interested in the inner workings of insurance as an instrument of indemnity.

A preliminary analysis of what has come from the First Instance trial of the Covid 19 BI Claims test case can be found in our Covid 19 Bulletin number 10 simply register or login to the Flaxmans Brokers Portal.

Flaxmans’ view

Getting the Claims Underway

Current claims
By now, all policyholders who have had Covid-19 BI claims rejected; or there is a pending complaint; or simply an open claim, should have received an update from insurers following the test case judgment.  Some of these letters simply call for extra time to consider the claim; others confirm a previous repudiation.  Either way, we recommend you contact your clients as they will need your guidance on what to do next.

We would very much like to see some of these letters, so please do send us some samples.  And, of course, if you are not sure that what is said is correct, get in touch for a free discussion.

Claim never submitted
Equally many business policyholders might never submitted a claim in the first place.  This could be simply because they have no non-damage BI extensions, or they might have been dissuaded from claiming because the industry was saying you can’t claim.

Our view is that Brokers should do all that they can to identify such clients who might have a valid claim – because it is only those clients who have submitted claims that will be receiving the specific updates by insurers as required of them by the FCA.

In particular, brokers should try to recall those clients who made an enquiry to them about claiming, but the broker reported that insurers had told them there was no cover.  It will be worth the exercise of reviewing such cases.

Keep in Touch
We very much value the brokers who keep in touch with us and tell us their concerns and opinions. It is invaluable to have the communications especially as most of us are ‘confined to barracks’ most of the time and not picking up the gossip in the traditional market venues for exchange of news and views.

We are available to talk to without the meter running so please use the facility; especially if you are a BIBA member.