Business Interruption – FCA test case

For information about the outcome of the FCA’s test case into how insurance policies respond to business interruption claims as a result of Covid-19 please visit this page.

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What was the test case?

In the summer of 2020, the FCA and eight insurers participated in a test case in the High Court to determine how insurance policies should respond to business interruption claims arising from Covid-19.

The High Court delivered its judgment in September and, following this, parties to the case including insurers and the FCA appealed some of the rulings. This appeal went straight to the Supreme Court which heard the case in late 2020.

The Supreme Court has now delivered its judgment on the case which is final and binding on all parties. No further appeals or course of action is open to any parties to the case.

Commenting on the Supreme Court’s ruling, RSA UK & International CEO Scott Egan said:

“The Supreme Court’s judgment brings welcome clarity for insurers and customers about how certain policy wordings should respond to Covid-19, and sets precedent for the future. Our teams will work with our broker partners to process claims impacted by the judgment as quickly as possible, including issuing interim payments whilst the full value of claims are calculated.”

Frequently asked questions about the FCA test case

Below you'll find the answers to some of the questions we're asked most about the FCA test case. You'll find all the information you need here about what happens next and any queries relating to claims. 

  • We have written to customers who have made claims relating to the scope of this case and will update this page with any further relevant information. Customers will either have heard from us that their claim is not impacted by the ruling, or that it is and we are revisiting their claim.

    Where we are revisiting claims in light of the Supreme Court’s ruling, we will be in touch with customers to update them, including maybe asking for more information to support their claim, as swiftly as possible.

    In the meantime, you can visit the FCA’s business interruption hub for more information here.

  • No, if a claim has already been made then no further action is needed at this stage. We will be in touch with customers as soon as possible to either settle valid claims or ask for more information to support their claims.

    Brokers and customers can also send an email to this address with any other queries related to the FCA test case or claims associated with it; Promise.Propertyclaims@uk.rsagroup.com.

  • If a claim has not yet been made, new claims can be made via email to Promise.Propertyclaims@uk.rsagroup.com.

    Brokers and customers can also use this address for any other queries related to the FCA test case or claims associated with it.

  • If we have previous turned down a claim, and the Supreme Court ruling does not mean that we will revisit that decision, then our previous decision will remain. We have written to customers in this situation and we are sorry that this will be disappointing to hear. However we hope the clarity provided by the Supreme Court gives the assurance that every possible angle has been considered in assessing whether and how policies could provide cover.

  • Customers who remain unhappy with how a claim has been handled remain able to contact the FOS.

    The first part of the process is to make a formal complaint to RSA, and this can be directed to the Complaints team here; crt.halifax@uk.rsagroup.com. RSA then has eight weeks in which to provide a Final Response Letter. If, having received that, a customer remains dissatisfied then they can refer their complaint to the FOS free of charge.

    It is likely that in all but exceptional circumstances they will apply the ruling of the Supreme Court’s judgment to all cases they hear. This means that we do not expect the FOS to rule that your claim should be paid, but we will of course work with them if you decide to take this route.

  • The Supreme Court was not asked to consider policies that provide cover for a notifiable disease extension where cover is in respect of on the premises. The FCA has acknowledged in their letter to insurers following the Appeal judgment that:

    “It remains the case that most SME BI policies are focused on property damage and only have basic cover for BI as a consequence of property damage, so are unlikely to pay out in relation to the Covid-19 pandemic and its effects. However, some policies providing cover for BI from other causes, in particular infectious or notifiable diseases and non-damage denial of access and public authority closures or restrictions, do provide cover for these events.”

    For these policy extensions the specific policy wording will determine if cover is provided. In order for us to assess whether a policy may respond to a loss, it is firstly necessary to show that Covid-19 was on the premises prior to its closure or the imposition of restrictions. If there is no such evidence of this, and the Premises were simply closed as part of the UK-wide lockdown, then unfortunately your policy will not provide any cover for the impact of Covid-19. 

  • Contemporaneous evidence will be required to show that Covid-19 was on the premises prior to its closure or the imposition of restrictions. Evidence could include copies of correspondence from the time, test results or sickness records (redacted for data protection) of any people who can be shown to have been on the premises at the relevant time.