Business insurance battle begins in Supreme Court

An urgent test case to determine whether businesses hit by coronavirus will receive insurance pay-outs is being heard by the Supreme Court today.

The Financial Conduct Authority sought legal clarity from the High Court earlier this year to establish whether policyholders affected by Covid-19 – many of which are small to medium sized enterprises – are covered by business interruption insurance.


The case was heard in July by the Divisional Court under the Financial Markets Test Case Scheme and a High Court judgment was handed down in September. However, both the watchdog and the insurers are appealing the decision, disputing the construction of certain provisions in the relevant insurance policies.

According to the FCA, the ‘leapfrog’ appeal – which allowed parties to bypass the Court of Appeal and progress straight to the Supreme Court – is the fastest way to get legal clarity for businesses.

This week, five Supreme Court justices will determine certain matters of construction relating to disease clauses, prevention of access clauses and hybrid clauses. The hearing will take place via video link and is listed for four days.

The case involves the FCA and eight insurance companies: Arch Insurance (UK) Ltd; Argenta Syndicate Management Ltd Hiscox Insurance Company Ltd; MS Amlin Underwriting Ltd; QBE UK Ltd; Royal & Sun Alliance Insurance plc; Hiscox Action Group; and Zurich Insurance Plc.

Some 31 barristers – including 13 QCs- will attend the hearing. International firm Herbert Smith Freehills is acting for the FCA while insurers are represented by Allen & Overy, Clyde & Co, DAC Beachcroft, DWF Law and Simmons & Simmons. 

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