Business Interruption: Covid-19: FCA BI test case: Appeal date set

Thursday 12th November, 2020

The Supreme Court have granted permission to appeal to all of those participants in the above who have applied for it. The appeal is set to be heard from Monday 16 November and is expected to last 4 days. Those who are appealing areas of the initial judgement are:

The Supreme Court will be considering appeals around the following:



Was the High Court correct?

  1. To apply certain counterfactual scenarios in relation to the operation of the clauses in relevant policies which provided for loss adjustment (the "Trends Clauses"); and 
  2. In its analysis of Orient-Express Hotels Ltd v Assicurazioni Generali S.p.A. 

The ‘counterfactual’ is the position insurers should adjust the loss against, being the position ‘but for the loss’.

The scope of the case and appeal is limited, and the Supreme Court will not be considering the following:

What does this mean for policyholders?

Whilst the FCA case in the High Court sought clarity for policyholders and insurers alike, the decisions of the judges were so nuanced and subject to individual interpretation, that the matter did not move on as significantly as hoped, despite early press reports of a significant victory for policyholders. Whilst some insurers are pressing on to obtain the financial information from clients, the vast majority of insurers are not prepared to fully adjust losses until the determination by the Supreme Court, particularly in respect of the ‘trends clause’ which, if this overturns the decision from the High Court, has the potential to significantly reduce or potentially remove the ability to claim for many policyholders.

Whilst Zurich and Ecclesiastical have decided not to appeal and RSA has decided to appeal on only two of their four contested wordings, the reality remains that whilst they are not appealing against the interpretation of their specific policy wording, they also, will await the outcome of the ‘wide area damage’ test amongst the other key elements.

There are no timelines as to when the Supreme Court will deliver its decision, however the FCA continues to work with Insurers to find solutions which resolve the outstanding issues, before the appeal takes place.

For further details see the FCA website using this link