Edinburgh 0131 200 1200
Aberdeen 01224 49 80 80

News + Events

News, commentary & events from balfour+manson 

Business Interruption Insurance – FCA test case likely to be heard in July

On 1 June 2020, the FCA published an update on its test case of the validity of business interruption claims in the light of the COVID-19 pandemic. The outcome of the test case is eagerly awaited by insurers and insureds alike with many small businesses that have had to close during the lockdown having already filed claims with their insurers.


The purpose of the test case was to seek an authoritative declaratory judgment about the meaning and effect of certain BI insurance policy wordings where there remains unresolved uncertainty. See here for further information.


The FCA has selected a representative sample of policy wordings that capture the majority of the key issues that could be in dispute. It also lists the insurers that use these wordings and which of those insurers it has invited, and have agreed, to participate in the proceedings.

The FCA has gone out of its way to make the test case process as transparent as possible. It has published a number of key documents for court consideration that form the basis of the test case. These include a proposed representative sample of policy wordings and a set of illustrative factual assumptions.

The FCA update includes the proposed timelines for how the various stages of the test case will proceed, subject to the court’s approval. Given its importance for both insurers and those cash-strapped businesses that have made BI claims, the test case has been fast-tracked. The FCA aims to file the claim form and particulars in the High Court in London on 9 June 2020. The insurers are expected to file a defence within a few weeks, with a view to a five to ten-day court hearing in the second half of July. It is expected that the judgment will be issued shortly thereafter. There also remains possibility of an appeal to the Court of Appeal, it’s likely that this would also be fast-tracked. There is also the chance that any appeal could “leap-frog” the Court of Appeal and go straight to the UK Supreme Court.

The FCA has also published consultation draft guidance on its expectations for insurers and insurance intermediaries when handling claims and complaints for BI policies during the test case. The FCA intends for the guidance to come into force when it issues the claim form to start the test case, or shortly thereafter.

How can we help?

Balfour+ Manson can offer advice on insurance issues, including business interruption claims. If you need any input, please contact Gordon Deane on 07876 658 912 or Gordon.deane@balfour-manson.co.uk.