LONDON — The Financial Conduct Authority prevailed over insurers in a Surpreme Court judgment Friday on pandemic coverage for businesses.
The panel of top U.K. judges “substantially allowed” the FCA’s arguments, upholding the regulator’s win in a lower court, while rejecting those of insurance companies that contested the previous ruling.
The action stemmed from a test case brought by the FCA this summer after insurers refused to pay some claims for business interruption related to the pandemic and goverment countermeasures.
“We will be working with insurers to ensure that they now move quickly to pay claims that the judgment says should be paid, making interim payments wherever possible,” FCA consumer-policy head Sheldon Mills said in a statement after Friday’s ruling. “Insurers should also communicate directly and quickly with policyholders who have made claims affected by the judgment to explain next steps.”
The insurance industry expects to pay about £1.8 billion to clients as a result of claims related to the coronavirus and the Supreme Court decision, according to the Association of British Insurers.
Huw Evans, ABI chief executive, said in a statement that insurers “regret the Covid-19 restrictions have led to disputes with some customers.”
“Insurers have supported this fast-track legal process every step of the way and we welcome the clarity that the judgment will bring to a number of complex issues,” Evans added.
As well throwing small businesses a lifeline, the judgment vindicates the FCA’s move to pursue payouts through the courts.
“We are pleased that the Supreme Court has provided a positive assessment of a number of insurance policies that will affect our clients,” said NDML, an insurance broker for leisure and hospitality companies. “However, we also know that the devil is in the details and therefore we are currently engaged in a meticulous reading of this judgment.”
This article has been updated with comment from the ABI.
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Insurers must pay coronavirus-related claims, rules UK Supreme Court The British Journal Editors and Wire Services/ Politico.