Small and medium-sized UK businesses forced to close by the government due to the CCP virus pandemic are covered under their business interruption insurance policies, the UKs High Court ruled on Tuesday.
The judgement of a test case decided that “most, but not all, of the disease clauses” and some “denial of access clauses” provide cover to affected small and medium-sized enterprises (SME), but it depends on “the detailed wording of the clause and how the business was affected” by the lockdown, the Financial Conduct Authority (FCA) said in a statement.
The FCA, which brought the case of behalf of business owners, estimated that the ruling may affect some 370,000 policyholders.
Christopher Woolard, interim chief executive of the FCA, said they are “pleased” with the courts decision, which he called “a significant step in resolving the uncertainty being faced by policyholders. ”
“Coronavirus is causing substantial loss and distress to businesses and many are under immense financial strain to stay afloat,” Woolard said. “Thousands of small firms and potentially hundreds of thousands of jobs are relying on this [case].”
The insurance companies can appeal the courts decision.
The British government in March announced its action plan to combat the spread to the CCP (Chinese Communist Party) virus, commonly known as novel coronavirus. People were told to stay at home if they could, and businesses considered non-essential were encouraged or mandated to close.
Insurance companies, overwhelmed by claims under business interruption policies, argued that the policies were not meant for a government-imposed lockdown, although some paid out subsequently.
Due to the unprecedented situation, the FCA brought a test case to the court in order to “urgently clarify key issues of contractual uncertainty for as many policyholders and insurers as possible,” the regulatory body said.
The FCA selected a representative sample of policy wordings issued by eight insurers, who agreed to defend the case: Arch, Argenta, Ecclesiastical, Hiscox, MS Amlin, QBE, Royal & Sun Alliance (RSA), and Zurich.
Tulsi Naidu, CEO of Zurich UK, said the decision confirmed her companys “interpretation and approach under these policies is correct,” and that she was “pleased that Zurichs participation in the process has helped achieve clarity for policyholders across the UK insurance sector.”
Scott Egan, CEO of RSA, called the judgement “an important milestone” that is also “complex.”
RSA is reviewing the over 150-page document to determine their next steps, Egan said in a Read More – Source