High court rules insurers should pay out on most claims

A landmark High Court ruling brought about by the Financial Conduct Authority against eight defendant insurers should mean that most policyholders of business interruption insurance can receive a payout.

The court found in favour of the arguments advanced for policy holders on the majority of key issues, having looked at a sample of 21 different policy wordings. Each policy needs to be considered against the detailed judgment to work out what it means for that policy.
Although it is possible that insurers will appeal against the judgement, policyholders should expect a communication from their insurers within seven days concerning their own policy.
Patricia Hanson, NDNA’s Director of Business Development said: "Since the Covid-19 pandemic started affecting childcare businesses we have received a lot of enquiries from concerned members. The court's ruling on the FCA's test case provides some hope for the sector but individual policyholders will still have to wait for answers on their own individual wording.

"This has been an issue we have taken up with insurers, the Government and the FCA on behalf of our members but we know there are still concerns for what happens if there are future lockdowns. The Government need to ensure that childcare businesses, as an essential part of the economy and our children's futures, are protected." 
Christopher Woolard, Interim Chief Executive of the FCA, said: ‘We brought the test case in order to resolve the lack of clarity and certainty that existed for many policyholders making business interruption claims and the wider market. We are pleased that the Court has substantially found in favour of the arguments we presented on the majority of the key issues. Today’s judgment is a significant step in resolving the uncertainty being faced by policyholders.
‘Insurers should reflect on the clarity provided here and, irrespective of any possible appeals, consider the steps they can take now to progress claims of the type that the judgment says should be paid. They should also communicate directly and quickly with policyholders who have made claims affected by the judgment to explain next steps.
‘If any parties do appeal the judgment, we would expect that to be done in as rapid a manner as possible in line with the agreement that we made with insurers at the start of this process. As we have recognised from the start of this case, thousands of small firms and potentially hundreds of thousands of jobs are relying on this.’
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