The UK’s Financial Conduct Authority (FCA) has continued to impart pressure on insurers over Covid-19 related business interruption wordings, indicating that it is set to go to appeal in its high-profile test case against several insurers.
In a statement the FCA said it had lodged an appeal as it sought to reach an agreement with the insurers over the fast payments of claims.
It said: “The FCA today [29 Sep] confirms that it has filed a ‘leapfrog’ application to appeal to the Supreme Court. The FCA’s intention has, throughout the process, been to achieve clarity on affected BI policies at speed. We believe that clarity was provided in the initial judgment handed down on 15 September.”
It added that the regulator was keen for insurers to pay claims to businesses covered by clauses deemed to have been triggered by the pandemic and the forced closure of businesses across the UK.
“The FCA therefore continues to work closely and at speed with the eight insurers and two intervenors that participated in the test case to reach an agreement in principle on a range of issues whereby an appeal process would not be required, and payments would be made on eligible claims as soon as possible,” it added. “Positive discussions continue with all parties.”
The statement also revealed that the majority of the insurers involved have also filed appeals against part of the ruling.
An agreement is needed by close of business on Wednesday, and seven insurer parties have made similar precautionary appeals, the FCA said.
RSA, one of the insurers involved, said it has sought leave to appeal and that a court hearing in relation to the appeal applications will take place on 2 October.
Hiscox, also involved in the case, said it has also taken the necessary steps to apply for an expedited appeal, adding that it “has not yet made a decision on whether it will seek to appeal”.
Discussions are ongoing with the FCA and other parties to try to resolve any outstanding issues before the October 2 hearing in line with the original court ruling, Hiscox said.
On the 1st May, the FCA announced that it would commence court proceedings to test how certain business interruption insurance policies respond to claims arising from COVID 19.
The purpose of the court proceedings was to provide clarity in relation to how certain business interruption policies and wordings should be interpreted and whether they cover losses arising from the COVID 19 pandemic.
On 15 September, the High Court handed down its judgment. While different conclusions were reached in respect of each wording, the court effectively found in favour of policyholders on the majority of the key issues arising out of the wordings considered in the representative sample.