UK FCA: Eight Insurers Agree to Be Parties to Business Interruption Insurance Test Case

June 04, 2020

Through the High Court test case, the UK Financial Conduct authority hopes to obtain legal clarity on business interruption insurance during the coronavirus (COVID-19) pandemic.

The UK Financial Conduct Authority (FCA) on June 1 announced details of the insurers that were invited to be parties to its planned test case in the UK High Court on business interruption (BI) insurance, and who have already entered into a framework agreement with the FCA governing the process and timetable for the test case. The insurers are Arch Insurance (UK) Limited, Argenta Syndicate Management Limited, Ecclesiastical Insurance Office Plc, Hiscox Insurance Company Limited, MS Amlin Underwriting Limited, QBE UK Limited, Royal & Sun Alliance Insurance plc, and Zurich Insurance Plc.

The FCA intends to obtain court declarations which it hopes will provide legal clarity on BI insurance during the COVID-19 pandemic more quickly and, according to the FCA, at a lower cost to policyholders.

The FCA clarified that the test case would not prevent parties complaining to the Financial Ombudsman Service or from pursuing their own disputes through negotiated settlement, arbitration, or court proceedings.


The June 1 announcement set out how the FCA envisages the test case will proceed in terms of key next steps and timelines, but acknowledged that its indicative timeline was still subject to a number of uncertainties, including the court’s consent.

The procedural timetable put forward by the FCA indicates that its claim form and particulars of claim will be filed by June 9 and that the insurers’ defences would be due two weeks later, by June 23. The FCA would then have an opportunity to serve a reply to the defences by July 3.

The FCA’s case timeline also anticipates two case management conferences, one after the claim form and particulars have been filed, and one after the defences have been filed. A 5–10-day trial is then expected to take place in the second half of July 2020, at which the FCA has said that it plans to “put forward policyholders’ arguments to their best advantage.”

Policy Wordings and Key Documents

The FCA has also identified the representative sample of BI insurance policy wordings that will be considered at the trial, and the insurers that use those wordings. Eight of these insurers have agreed to participate as defendants in the test case.

However, the FCA has asked all insurers to check their policy wordings against the representative sample to see if theirs will be impacted by the outcome of the case. The FCA has said that it plans to publish a list of all relevant insurers and wordings that may have impacted policies in early July.

The FCA has confirmed that it has published four key documents which it plans to “invite the Court to consider and would therefore form the basis of the test case.” These can be accessed from its website and are the Proposed Representative Sample of Policy Wordings, Proposed Assumed Facts (or “fact patterns”), Proposed Issues Matrix, and Proposed Questions for Determination by the court.

The Proposed Representative Sample of Policy Wordings comprises a selection of policy wordings which the FCA “believes captures the majority of the key issues that could be in dispute.” The Proposed Assumed Facts (or “fact patterns”) is said to contain a set of illustrative factual assumptions such as the nature of the affected businesses and how they have been affected by the COVID-19 pandemic. However, the FCA said that not all of the assumed facts will be applied to all of the representative samples of policy wordings. Instead, according to the FCA, they will act as a menu of potential fact patterns to assist the court.

The Proposed Issues Matrix will identify which of the questions for the court’s determination will be engaged by each policy, and the Proposed Questions for Determination by the court is a list of potential questions prompted by insurers’ reasons for denying claims, which the FCA has said will inform its particulars of claim.

With a very compressed time frame, the FCA has invited comments on these documents from policyholders, insurance intermediaries, insurers, other stakeholders and their legal advisers by June 5.

How We Can Help

It is important for policyholders confronting significant COVID-19-related business interruption losses to confer with experienced coverage counsel. We can advise on the potential impact of these proceedings on a business’s ability to recover its losses and otherwise advise on the best paths to preserve and pursue coverage claims.

We have experience assisting clients in obtaining business interruption insurance recovery in a wide range of scenarios and have consulted with clients on the implications of COVID-19. We stand ready to assist businesses in maximizing their recovery of business losses in this area. For assistance with these or any other issues, contact any of the Morgan Lewis lawyers listed below.

Coronavirus COVID-19 Task Force

For our clients, we have formed a multidisciplinary Coronavirus COVID-19 Task Force to help guide you through the broad scope of legal issues brought on by this public health challenge. Find resources on how to cope with the post-pandemic reality on our NOW. NORMAL. NEXT. page and our COVID-19 page to help keep you on top of developments as they unfold. If you would like to receive a daily digest of all new updates to the page, please subscribe now to receive our COVID-19 alerts, and download our biweekly COVID-19 Legal Issue Compendium.


If you have any questions or would like more information on the issues discussed in this LawFlash, please contact any of the following Morgan Lewis lawyers:

Peter Sharp
Afzalah Sarwar
Paul Mesquitta

Washington, DC
Gerald Konkel
Teri Diaz

San Francisco
Jeffrey Raskin