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COVID-19 update – Business Interruption (Income) FCA Test Case : Information
Background
On 1 May 2020, the Financial Conduct Authority (FCA) announced that it intended to obtain a court declaration to ensure clarity on whether certain non-damage business interruption insurance policies provide cover for losses arising as a result of COVID-19.
Although ‘The New India Assurance Co. Ltd.’ (New India) was not a party to the Test Case, this announcement may affect policyholders insured under some business interruption policies that New India provide cover for. New India fully supports the Test Case process along with the clarity and certainty it brings for affected policyholders as well as Insurers.
This page provides information about the Test Case and what it means for New India’s policyholders.
Timeline of the FCA Test Case Judgement:
- On 15 September 2020 the High Court shared its judgment on the Test Case.
- On 2 October 2020, a hearing took place during which the court heard the parties’ arguments on the appropriate declarations to make and granted approval to the FCA, six of the insurers and one of the intervenors certificates for a “leapfrog” appeal to the UK Supreme Court.
- On 20 October 2020, the FCA made the final declarations and the relevant parties’ applications to appeal to the Supreme Court available on its website.
- On 2 November 2020, the Supreme Court granted permission to appeal to all those who had applied for it. The scope of the appeals covered some, but not all of the questions addressed by the High Court judgment, leaving some parts of the High Court judgment unchallenged.
- On 11 November 2020, the FCA published the written cases for the appeals and the written cases responding to those appeals on its website.
- On 15 January 2021 the Supreme Court handed down its judgment on the appeal. The judgment can be found here. There are no further avenues of appeal from the Supreme Court so all rights of appeal have now been concluded in respect of the Test Case.
New India is carefully considering the Supreme Court judgment, and its impact on claims and complaints under relevant Business Interruption policies where New India provides cover and which we have identified as potentially affected by the outcome of the Test Case.
The FCA has published a list of insurers and policies capable of responding to the Covid-19 Pandemic following the test case, as a result of the Supreme Court judgment. Please note that, as the FCA points out:
- “Inclusion in this list does not mean that the outcome on any particular claim for the below policy wordings will be affected. Each policy wording and policyholder’s circumstances will need to be considered on a case by case basis”.
- “Where a policy is not included on this list, this may be for a number of reasons including but not limited to the policy wording being of a type not tested in the Test Case (e.g., containing an exhaustive list of diseases only or where the policy contains a relevant exclusion clause which was not tested)”.
The FCA will also periodically publish data on the number of claims settled and pending across the UK market, where the decision to accept claims was affected by the test case.
What does the Test Case mean for New India’s policyholders?
Although New India was not a party to the Test Case, the outcome of the Test Case will provide guidance on the interpretation and review of claims made under certain business interruption policies that New India provides insurance cover for.
What is New India doing next?
We are carefully considering the Supreme Court judgment, and any impact that this may have on claims and complaints under our Policies. Our policy Holders have been informed about final judgement of the test case and the possible impact it may have on their Claims. Loss adjusters have been advised to contact the Policy holders and their representatives on priority for submission of requisite documents for evaluation of coverage and liability, if any.
- New India has written to policyholders who have made claims or complaints for non-damage business interruption losses related to the coronavirus pandemic under relevant business interruption policies to inform them whether or not their claim or complaint may be affected by the Test Case, and the implications of the same.
- After the Supreme Court judgement, New India has revisited all claims, including those we have declined, and complaints relating to COVID-19 and decisions made on affected policies to ensure they are handled in line with the Supreme Court’s judgement. If the position on your claim or complaint has changed from the previous intimation, we will write to you.
- All policy holders with relevant claims have been advised to submit all necessary claim related documents as soon as possible. If you have any queries, please contact our Commercial Claims Office. Policyholders will appreciate that your claim not only depends on the interpretation of the wordings, but also on circumstances of the claim and compliance with policy terms and conditions.
Updated: 14th May 2021