The Supreme Court dismissed insurers’ appeals brought after a High Court ruling in September found mostly in favor of policyholders. The Financial Conduct Authority, the country’s securities watchdog, had brought that test case to resolve uncertainties surrounding business-interruption cover.
The case has been watched closely, as millions of companies world-wide lodge claims and grapple with their insurance companies. In the U.S., legal battles over business-interruption policies have unfurled across states, leading to various judgments. Of the roughly 100 rulings in suits between businesses and their insurers, about three-quarters have found in favor of insurers, The Wall Street Journal reported last month.
At the time of the High Court ruling, the FCA said the judgment found that most, but not all, of the clauses considered by the court provide cover. The ruling Friday draws a line under the matter and could affect up to 370,000 policyholders with billions of pounds of claims. Though only eight insurers were parties to the test case, the regulator expects the decision to apply to all insurers in its remit.
“Today’s judgment decisively removes many of the roadblocks to claims by policyholders,” said Sheldon Mills, executive director, consumers and competition at the FCA.
Naz Gauri, principal associate at law firm Eversheds Sutherland, said the Supreme Court’s ruling could prompt further claims because it broadens the circumstances in which policyholders can recover their losses compared with those allowed by the lower court.
The case’s progression through the courts was unusually quick, having first been brought in June and then expedited to the Supreme Court for appeals held in November. The FCA said it wanted to get clarity on the matter as quickly as possible.