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Judgment has been handed down in the test case brought before the High Court in England by the UK Financial Conduct Authority (“the FCA”) on behalf of business interruption policyholders of eight insurers.


The FCA had sought clarification as to whether or not the business interruption policies of the specified insurers were required to compensate policyholders for losses incurred as a result of the COVID-19 pandemic. Lawyers for the FCA announced that the Court had found in favour of the FCA “on the majority of the key issues”.

The hearing ran for eight days in the last two weeks of July. Submissions were made by the FCA, the Hospitality Insurance Group Action, Hiscox Action Group and the eight defendants who had agreed to take part in the test case. The defendents were:

  • Arch Insurance (UK) Ltd

  • Argenta Syndicate Management Ltd

  • Ecclesiastical Insurance Office Plc

  • MS Amlin Underwriting Ltd

  • Hiscox Insurance Company Ltd

  • QBE UK Ltd

  • Royal & Sun Alliance Insurance Plc

  • Zurich Insurance Plc


The judgment of Lord Justice Flaux and Mr Justice Butcher found substantially in favour of the arguments presented on behalf of the FCA. It was held that businesses that were forced to close as a result of COVID-19 restrictions are entitled to recover losses incurred during that period, subject to the limitations of their particular policy. The judgment provides widely sought clarification as to the effect of the wording of 21 types of business interruption policies with the eight insurer defendants. In particular, it was held that “non-damage” clauses covering disease and denial of access to business premises triggered pay outs.

Next steps

The FCA has now called on insurers to make contact with policyholders who have made claims under these policies and explain next steps to them as soon as possible. They have also cautioned policyholders to carefully read the extensive judgment to ascertain how it applies to their particular policy.

The defendants have been given leave to expedite an appeal of the judgment directly to the English Supreme Court.


From the point of view of UK policyholders, the judgment provides welcome clarity on the extent to which UK insurers are required to pay out under a range of business interruption policies.

However, it is expected the judgment will be appealed, given the significant and wide reaching implications of the obligation to pay out on as many as 370,000 policies.

Insurers and policyholders in Ireland and other common law jurisdictions will continue to follow developments in both this case and in the litigation against FBD currently before the Irish Courts.

For more information on the potential impact of this judgment for Irish insurers, contact a member of our Insurance & Risk team.

The content of this article is provided for information purposes only and does not constitute legal or other advice.

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