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Supreme court business interruption ruling not expected until 2021

23 December 2020 by
Supreme court business interruption ruling not expected until 2021

Thousands of businesses will have to wait until the new year for the result of the supreme court ruling on whether insurers should pay out for business interruption claims related to Covid-19.

A test case brought by the Financial Conduct Authority (FCA) against eight insurance companies was subject to an appeal hearing in November.

But the FCA said in an update: "We have been informed by the supreme court that it will not be in a position to hand down the judgement before January 2021."

Many insurers declined to pay out following the enforced closure of hospitality businesses in March, arguing that business interruption policies did not cover a government-imposed lockdown.

This prompted the FCA to bring a test case on behalf of policy-holders seeking to clarify the issue.

In September a high court ruled that Covid-19 claims should be paid in most cases where policies had pandemic or notifiable disease clauses.

The FCA sought to appeal aspects of the judgement, as did insurers Arch, Argenta, Hiscox, MS Amlin, QBE and RSA, and the case was heard in the supreme court over four days in November.

Around 370,000 policyholders were affected by the initial high court ruling, with many tens of thousands impacted by the further appeal. It was hoped the high court ruling would see claims progressed.

The Night Time Industries Association and bars and nightclubs broker NDLM said in November they were ‘cautiously optimistic' that the court would find in favour of the FCA and its clients.

They added that the judges ‘engaged positively' with wording highlighting how insurers shouldn't ‘cherry pick' between policies and clauses to avoid paying out.

Image: Shutterstock

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