The UK’s Financial Conduct Authority (FCA) is launching a short consultation on guidance to help policyholders, insurers and insurance intermediaries judge how the presence of COVID-19 in a particular area may be proved.
“We are launching this consultation so that we will be in a position to issue it as soon as possible, once we have the judgement of the Supreme Court,” said FCA in an official statement.

The development comes after the Supreme Court held a four-day hearing last month for the FCA’s test case on business interruption insurance relating to the coronavirus pandemic lockdown. The court is expected to announce its judgement on the landmark case by January 2021.

The FCA had initially launched the test case to determine whether a representative sample of eight insurance companies with various policy wordings covering business interruption would have to pay out claims to businesses that were forced to close as a result of the COVID-19 lockdown in March.

The case was first brought to the London High Court which handed down a judgment on 15 September stating that some of the world’s biggest insurers were wrong to reject tens of thousands of claims from small firms battered by the COVID-19 pandemic.

Six insurers and a policyholder action group then joined the FCA in appealing the judgement in the Supreme Court.

FCA’s draft guidance builds on the High Court’s judgment and is intended to ensure that the process of proving the presence of coronavirus is made as simple as possible for eligible policyholders. This will enable them to receive claim payments as early as possible should the Supreme Court uphold the High Court’s decision that relevant policies potentially provide cover in response to the pandemic.

“The High Court’s judgment provided authoritative guidance for the interpretation of the circa 700 policy wordings identified as affected by the test case by circa 60 insurers. 12 out of the 21 policy types tested were found to have the potential to provide cover in response to the pandemic, nine were not,” said FCA.

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