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British Regulator to Ask Court for Clarity in BI Coverage

In disputed cases, the regulator will rule on the meaning and effect of some policy wording.
  • Timothy Darragh
  • June 2020
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The U.K. insurance regulator, seeking to speed up resolution of complaints about insurers' failure to cover business interruption losses, will ask the British court to clear up definitions and policies at the center of coverage disputes.


The range of wordings and types of coverage are sufficiently broad in the BI market that it is difficult to determine at a general level the degree to which any one individual customer may be able to claim.

Financial Conduct Authority


“The issues around BI policies are complex and there are significant differences in policy wording between policies and across firms,” the Financial Conduct Authority said in a statement. “These complexities have the potential to create ongoing uncertainty for a lengthy period. It is clear that decisive action is appropriate given the severity of the potential consequences for customers in the current coronavirus emergency.”

In April, the FCA announced most business interruption policies purchased by smaller companies don't cover coronavirus-related losses, saying it had no grounds to force insurers to pay uncovered pandemic BI claims.

However, the FCA said in its latest statement the language of each contract needs to be studied.

“Whether there is cover for the business interruption related to the pandemic crisis will depend on a number of factors including the policy's wording,” it said. “The range of wordings and types of coverage are sufficiently broad in the BI market that it is difficult to determine at a general level the degree to which any one individual customer may be able to claim.”

The FCA called on insurers to pay out quickly on policies where there is a clear obligation to cover, and use interim payments where appropriate.

For disputed cases, the FCA said it will seek an authoritative declaratory judgment regarding the meaning and effect of some BI insurance policy wording. It said it is working to identify a sample of cases representative of all the most frequently used policy wordings that have created uncertainty.

It also said it has outlined to a small number of firms, as well as the Association of British Insurers, its proposals for seeking a timely, transparent and authoritative judgment. Those firms include some that have already made decisions about the application of their policies and others that are considering similar questions around policy coverage that also could create uncertainty, it said. The FCA said the firms needed to clarify their position, by no later than mid-May, as to whether they believe their policy wordings for BI losses arising other than from property damage provide coverage.


Timothy Darragh is an associate editor, BestWeek. He can be reached at timothy.darragh@ambest.com.


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