Business interruption claims and the industry test case
In June 2020, the Financial Conduct Authority (FCA) commenced court proceedings to seek legal clarity on the interpretation of certain non-damage business interruption policies in relation to losses resulting from the Covid-19 pandemic. Some of Hiscox's policy wording for its business interruption covers were considered as part of this Test Case, along with those of other insurers.
The Judgment has now been delivered by the High Court of England and Wales - the High Court found that there is cover for some Hiscox policyholders in certain circumstances. Each customer's claim is different and the ultimate outcome will depend on each claimant's policy and individual circumstances.
The full Judgment [will be / is] available for you to view on the FCA’s website at https://www.fca.org.uk/firms/business-interruption-insurance (external link).
The FCA, Hiscox and the other parties involved now have an opportunity to apply to the Court for permission to appeal some or all of Judgment to a higher court. The parties may also ask that any appeal proceed straight to the Supreme Court, rather than to the Court of Appeal first, in order to expedite the appeal process.
A further hearing will be held in October 2020 before the same Judges. That hearing will consider whether there will be an appeal, what the appeal may cover, and whether the appeal will proceed straight to the Supreme Court.
We are considering how the Judgment and any possible appeal affects these claims, and we will update customers following the outcome of the hearing in October. There is no need for you to take any further action at the moment.
In the meantime, please refer to our frequently asked questions:
Q. What does the result mean?
A. The Judgment comprises over 160 pages of legal analysis by the Court on a number of important points of insurance law for the insurance industry and customers. Hiscox is reviewing the Judgment in detail. We understand that the last few months have been incredibly difficult for businesses. Our goal has always been to provide clarity and certainty for customers on the application of their policy. Like others in the industry, we are working as quickly as possible to achieve this.
Q. What does this mean for my clients with claims?
A. We are currently reviewing the Judgment in detail. We will provide an update following the hearing in October on what this means for their claim. There is no need for you to take any further action at the moment.
Q. Will you contact me or my clients with updates?
A. In July, we contacted you to confirm your communication preferences for customers with claims that may be affected by the outcome of the Industry Test Case. We will apply these same preferences to any future communications about the Industry Test Case and its implications for your customers' individual claims.
Q. What are the next steps?
A. The FCA, Hiscox, and the other parties involved in the Industry Test Case now have the opportunity to apply to the Court for permission to appeal some or all of the Judgment. The parties may also ask that any appeal proceed directly to the Supreme Court, rather than to the Court of Appeal first, in order to expedite the appeal process. It is expected that a ruling on any such application would be made in on October. We will know more about the appeal process and if any appeals affect your customers’ claims following a further Court hearing in October 2020.
Q. What if I need more information?
A. Until we have assessed the outcome of the Industry Test Case, we will not be in a position to provide you with any further information. We are working through it as quickly as possible so that we can update on the outcome and what the implications on your clients’ claims will be.
Q. What if I need to register a new business interruption claim on behalf of a client?
A. If you want to submit a claim now you can do so by following this link at https://claims.hiscox.co.uk/
We have also set up a dedicated business interruption phoneline, 01206 773 941, which is open 0900 – 1730 / Monday to Friday.