
Big news for thousands of businesses as the UK Supreme Court rules in favour of policyholders and the Financial Conduct Authority (FCA) in what has been described as a landmark case centred on business interruption insurance.
This is a huge win for policyholders affected by the COVID-19 pandemic who are now expected to receive payouts on claims worth in excess of £1 billion.
What's all the fuss about?
The complex case involves business interruption insurance - a key element of commercial insurance policies - which is designed to pay out if a firm is unable to trade due to an unexpected event.
Many businesses claim they should have received payouts from their insurers after the first COVID-19 lockdown in Spring/Summer 2020, left them unable to trade.
However, insurers have been accused by some of relying on technical legal arguments to wriggle out of their responsibilities and declining to pay out, arguing that business interruption policies were not designed to cover government-imposed lockdowns.
This prompted the FCA to launch a test case to provide clarity over the matter.
That's a much needed boost but what happens next?
Following the historic victory, the FCA will now work with insurers to ensure they promptly pay claims to businesses, many of which have been struggling to stay afloat through the ongoing pandemic.
The FCA anticipates roughly 370,000 policyholders may be affected by the outcome of the test case with claims outstanding sat at circa £1.2 billion, although some analysts believe the figure may be much higher.
How can I find out more?
The FCA continues to publish detailed guidance online for affected businesses and will continue to keep policyholders appraised of matters as they progress - You can find out more and keep track here
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