The regulator said it would bring the High Court action to test 17 disputed policy wordings that have prevented business owners from receiving payouts through business interruption insurance amid the pandemic.
Whilst many insurance holders have tried to claim on business interruption insurance in light of the Covid-19 pandemic and consequent global lockdown, many have had their claims refused, with insurers claiming that their policy wording does not include government responses to the pandemic.
In light of this, the FCA first announced that it would launch a test case on 1 May. Since its announcement last month, the regulator has approached 56 insurers and reviewed over 500 relevant policies from 40 insurers.
It has now identified a sample of 17 policy wordings that “capture the majority of the key issues that could be in dispute”, and a representative sample of insurers has now been asked to “assist” the regulator by taking part in the High Court action.
The regulator identified the policies which were “representative of the key arguable issues” and invited insurers to participate on the “basis of securing the maximum relevant coverage for relevant policies”.
A ruling is expected to take place later this year, after a 5-10 day court hearing in mid July. This will be preceded by a short consultation, before a claim form is filed with the High Court on 9 June. The insurers inquisition will file their defences on 23 June.
The regulator announced it would be able to publish the fill list of insurance companies that the test case outcome will affect in early July.
Chris Woolard, FCA chief executive, said: “‘The court action we are taking is aimed at providing clarity and certainty for everyone involved in these BI disputes, policyholder and insurer alike.
“We feel it is also the quickest route to this clarity and by covering multiple policies and insurers, it will also be of most use across the market. The identification of a representative sample of policies and the agreement of insurers who underwrite them to participate in these proceedings is a major step forward in progressing the matter to court.”