17 September 2020
The English High Court handed down judgment yesterday in the Covid-19 Business Interruption insurance test case of The Financial Conduct Authority v Arch and Others. Herbert Smith Freehills represented the Financial Conduct Authority (“FCA”) (who, as the industry regulator, was advancing the claim for policyholders) in the case, which considered 21 lead sample wordings from eight insurers. Following expedited proceedings, the English High Court judgment brings highly-anticipated guidance on the proper operation of cover under certain non-damage business interruption insurance extensions. While different conclusions were reached in respect of each wording, the Court found in favour of the FCA on the majority of the key issues, in particular in respect of coverage triggers under most disease and ‘hybrid’ clauses, certain denial of access/public authority clauses, as well as causation and ‘trends’ clauses. The judgment should therefore bring welcome news for a significant number of the thousands of policyholders impacted by COVID-related business interruption losses. Insurers relied heavily on Orient Express Hotels Ltd v Assicurazioni Generali SpA [2010] EWHC 1186 (Comm) in their submissions on causation. However, the Court distinguished it and considered that nothing in the analysis in Orient Express had any impact on the correct construction of the wordings it was considering. The Court did however say that if it had to rule on the case it would have determined that it was wrongly decided. Click here for our summary of the English High Court's decision. Sign up here to keep up-to-date with legal and regulatory developments in the insurance sector |
For further information, please contact:
Gareth Thomas, Partner, Herbert Smith Freehills
gareth.thomas@hsf.com