Test case win paves way for COVID insurance payouts
The Financial Conduct Authority (FCA) has won a test case that could cost insurers over £1billion in COVID-related claims that had previously refused for payment.
Tens of thousands of small businesses stand to benefit from the result of the test case, brought by the FCA to bring clarity to complex legal issues.
The Supreme Court has substantially allowed the FCA’s appeal which will force insurers to pay Coronavirus business interruption losses. These policies had clauses that covered infectious or notifiable diseases, and denial of access clauses.
The test case aimed to clarify key issues of contractual uncertainty for an estimated 370,000 policy holders holding 700 types of policies issued by 60 insurers.
The FCA will now publish guidance to help policy holders to understand the test case, and the policy types that are affected by the judgement. The challenge now is for the huge number of claims to be settled, and quickly enough for the affected businesses to feel the benefits of the policies they have paid out for. Guidance has been issued by the FCA that requires insurers to make payments promptly, now that that appeals process has been concluded.
In the meantime, insurers will also be reviewing the policy wordings to assess the resulting impact on their potential liabilities.
If you’re affected by the test case, or have been told that a claim isn’t valid, more details are available here.