3PB advise UK businesses on claims for lost profits following landmark decision in the FCA’s Business Interruption Insurance case

22nd September 2020

3PB commercial barrister Neil FawcettNeil FawcettCall: 2006 has prepared a summary briefing for clients and UK businesses and their lawyers on the test case of Financial Conduct Authority v Arch Insurance (UK) Ltd. and Ors [2020] EWHC 2448 (Comm) which was handed down last week in a 160-page judgement.

The briefing outlines some of the interesting features of the decision and how this will affect insurance claims. The judgment will provide significant scope for argument but it is, overall, a landmark victory for claimants, most of whom are small to medium-sized businesses.

Neil and colleagues at 3PB are currently advising over 500 UK businesses of all sizes in relation to how the judgment will affect their claims and it is important to note that despite the judgment in this FCA case, much of the argument in each individual case will still relate to the specific wordings of each policy schedule, policy wording, any notice of amendment and the facts of each individual case upon which 3PB would recommend policyholders take specific expert advice.

In late March 2020 many businesses were forced to close by the government-imposed “lockdown” put in place by a series of amended and re-amended regulations made by government ministers causing those businesses to sustain enormous losses which their owners thought were covered under the terms of their business interruption insurance policies.

Neil Fawcett states that “nearly all of the claims have been met with letters of rejection from insurance companies, sometimes putting forward ludicrous arguments as reasons to decline paying out under policies obtained often with very substantial premiums. Many insurers, for example, have claimed that the policies were not intended to cover outbreaks of “epidemic diseases” despite no such exclusion-terms appearing in the policy and despite there being clauses ostensibly allowing claims based on the outbreak of disease.”

The briefing makes clear that the court’s decision may still leave arguments between the parties on matters such as permission to appeal, if the insurers seek a decision on any particular points by the Supreme Court. There may need to be a further hearing for those purposes. It is still not at all clear whether the insurers intend to appeal or not, but given the overall victory for policyholders, and the sums involved for insurers there may be some appetite for this appeal. The insurers though will need to have a specific legal basis or bases for any such appeal.

If you wish to discuss about Business Interruption Insurance and whether your business or your client’s business could have a claim, please contact Neil Fawcett on neil.fawcett@3pb.co.uk or by calling his clerks David Fielder or James Parks on 0330 332 2633 or by email on david.fielder@3pb.co.uk or james.parks@3pb.co.uk.