Information about the FCA business interruption Test Case

24 Jun 2020

On 1 May 2020, the Financial Conduct Authority (FCA) announced that it intended to obtain a court declaration to resolve uncertainty around whether certain non-damage business interruption insurance policies provide cover for losses arising as a result of COVID-19. 

Although Aviva is not a party to the Test Case, it may affect policyholders insured under some business interruption policies that we provide cover for. Aviva fully supports the Test Case process, and the greater clarity and certainty that it will bring for those affected policyholders, so that valid claims can be paid as quickly as possible.

This page provides information about the Test Case and what it means for Aviva’s policyholders. It will be kept updated with additional information.

What is the Test Case? 

The issues relating to the impact of COVID-19 on business interruption policies are complex.  By using a special court procedure, the FCA is seeking to obtain clarity on a much quicker timescale than would otherwise be possible.  

Following consultations with insurers, policyholders and insurance brokers, the FCA has chosen a selection of policy wordings which it considers is representative of the most important issues in dispute between policyholders and insurers*. These policy wordings, and a selection of the insurers  which provide insurance on those policy wordings, have been included within the scope of the Test Case.  

Here is a summary of the key Test Case developments so far and key future dates: 

9th June 2020

The FCA formally started the Test Case process.

16th June 2020

The first case management conference was held. At this it was confirmed that: 

  • the hearing for the Test Case should start on 20 July (expected to last eight days);

  • the case will be heard by Lord Justice Flaux and Mr Justice Butcher;

  • and the parties will need to take a number of steps by specific dates before 20 July.

23rd June 2020

  • Insurers filed their Defences

26th June 2020

  • The second case management conference was held, at which the court gave various directions relating to how the test case is to proceed.

3rd July 2020

  • The FCA filed its reply to the Insurers’ Defences.

10th July 2020

  • The FCA and Intervenors’ skeleton arguments were served. 

14th July 2020

  • The Insurers’ skeleton arguments were served.  

20th to 23rd July and 27th to 30th July 2020

  • 8 day court hearing took place before Lord Justice Flaux and Mr Justice Butcher.

We will keep this summary updated as the Test Case progresses. We do not currently have confirmation of when the outcome of the Test Case will be announced following the hearing, which concluded on 30 July 2020.

You can also find additional information and documents on the FCA's webpage relating to the Test Case here. The FCA's webpage includes a feature that allows you to subscribe for email updated from the FCA - you may want to subscribe so that you stay updated on developments relating to the Test Case.

The Financial Ombudsman Service has also provided some information about the potential impact of the Test Case on policyholders, which can be accessed here. 

What does the Test Case mean for Aviva policyholders?

Although Aviva is not a party to the Test Case, the outcome of the Test Case will affect Aviva’s review of claims made under certain business interruption policies we provide insurance cover for:

  • Aviva provides insurance on one of the policy wordings which is specifically being considered by the Test Case (RSA type 4 of 4 (Marsh / Jelf Material Damage & BI – Resilience)). 
  • The Test Case will also provide guidance on the interpretation of some other business interruption policies that Aviva provides insurance cover for. 

Which policies insured by Aviva may be affected?

We have considered which of our relevant Business Interruption policies that we provide cover for may be affected by the outcome of the Test Case. In particular, we reviewed policies issued before 17 June 2020 which provide cover for business interruption caused by:

  • The presence of a disease at, or in the vicinity of, an insured premises (a disease trigger); and/or
  • The action of the government or other authority which prevents or restricts the access or use of an insured premises (a denial of access trigger).
  • A list of policies which may be affected by the Test Case, as published on the FCA’s webpage, is available here. Inclusion on this list does not necessarily mean the outcome on any particular claim for the policy wordings listed will be affected.

What are the implications of the Test Case for my claim or complaint?

We are writing 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 that. 

Once the issues being considered in the Test Case have been resolved, we will be revisiting any 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 court’s decision. 

You can still refer complaints to the Financial Ombudsman Service if your policy is affected by the Test Case and any time limits to make such a complaint will be suspended during the Test Case.  

Do I need to do anything?

If you have already made a claim or a complaint, you do not need to do anything as the FCA is taking the Test Case on behalf of policyholders. 

When the outcome of the Test Case is known, we will review our decisions to ensure they are in line with the court’s judgments. If the position on your claim or complaint has changed, we will write to you.

*Arch Insurance (UK) Limited, Argenta Syndicate Management Limited, Ecclesiastical Insurance Office plc, Hiscox Insurance Company Limited, MS Amlin Underwriting Limited, QBE UK Ltd, Royal & Sun Alliance Insurance plc and Zurich Insurance plc will be taking part in the case.

First published - 24/06/2020

Updated - 03/07/2020

Updated 16/07/2020

Updated - 31/07/2020