Coronavirus: Insurers to test whether they should pay out to businesses
A test case will examine whether insurance policies should pay out millions of pounds to firms hit by the coronavirus pandemic.
Monday 1 June 2020 16:51, UK
Eight insurers will go to court in a test case to decide whether their policies should pay out to businesses hit by the coronavirus crisis.
The case aims to clarify whether the wording of some insurance policies should provide cover for businesses during the pandemic.
The case is expected to begin in the second half of July and last for up to 10 days.
Many British businesses have sought compensation for having to close as a result of government efforts to limit the spread of the coronavirus.
The Financial Conduct Authority (FCA) has chosen 17 examples from business interruption policies used by 16 insurers, eight of which are taking part in the case.
They are Lloyd's of London, Hiscox, Arch, Argenta and MS Amlin, as well as RSA, QBE, Zurich, and Ecclesiastical.
Hiscox said it had agreed to be part of the case to provide certainty for businesses and brokers as quickly as possible, while RSA said it expected its reinsurance programme to provide most of the cover for potential claims.
The FCA said: "We expect the test case to provide guidance for the interpretation of many other business insurance policies that are not in the representative sample.
"In early July, we expect to publish a comprehensive list of other insurers and many other (business interruption) policies in the market that we expect the test case to affect, based on firm submissions."
The FCA said insurers can continue with any plans for voluntary settlement of cases but all insurers should check their policies against those to be tested in court to see if they could be affected by the case's outcome.