Context
On 17 June 2020 the FCA published finalised guidance for insurers on the business interruption (‘BI’) insurance test case (‘Test Case’). It asked insurers to review relevant non-damage business interruption policies to determine whether claims outcomes may be affected by the final resolution of the Test Case. The FCA published insurers’ lists of affected policies is as submitted to the FCA on Friday 10 July 2020 (‘July Submission’).
Key points to note
- On 22 January 2021 the FCA sent a Dear CEO letter to insurers impacted by the Test Case, in which it set out its intention to send an information request to insurers for updated details of all non-damage BI policies that are, in principle, capable of responding to the Covid19- pandemic following the Court judgments.
- Insurers have now provided their updated lists of affected policies.
- The list published includes insurers and policies that were submitted to the FCA by 11 March 2021 and may be subject to further update.
- The list is in the form submitted to the FCA and records the firm’s view of the application of the Test Case to the relevant policy.
- Insurers were asked to include:
- all relevant non-damage BI policies that the insurer indicated in its July Submission were affected by the Test Case; and
- any relevant non-damage BI policy that it previously did not include in the July submission, or had assessed as not affected, that it now deems to be affected by the outcome of the Test Case
- Some insurers may have reached different conclusions regarding whether similar policies are, in principle, capable of responding to the Covid-19 pandemic, most notably in relation to policies where it is necessary for the policyholder to prove the presence of Covid-19 at the premises. This will impact the list of policies that some insurers have submitted for inclusion in this list.
- The FCA’s Dear CEO letter asked insurers to communicate directly, and as soon as possible, with policyholders who have made claims/complaints that are potentially affected by the Supreme Court judgment to explain the next steps. The FCA is reminding consumers in this publication that, it they are uncertain why their policy has not been included in this list or they have any other queries regarding their non-damage BI policy, they should refer to the communication they have received from their insurer or broker or contact them directly.
- Inclusion in this list does not mean that the outcome on any particular claim for the listed policy wordings will be affected. Each policy wording and policyholder’s circumstances will need to be considered on a case-by-case basis.
- Where a policy is not included on this list, this may be for a number of reasons including, but not limited to, the policy wording being of a type not tested in the Test Case (e.g., containing an exhaustive list of diseases only or where the policy contains a relevant exclusion clause which was not tested).
- The list does not include policy wordings which are only held by fewer than 5 policyholders.
- Policyholders may refer to the FCA’s BI webpage under the heading “FCA Guidance and Statements for Policyholders” for more information.
- The policies listed cover over 200,000 policyholders. The policy wording names included in the list are as submitted by the insurer.
Next actions
Affected firms should review the updated list to assess whether they have any affected customers.