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Insurance Partners comment on FCA High Court BI policies test case

Posted on 15 May 2020

The Financial Conduct Authority has today issued an invitation to policyholders and insurance intermediaries to provide information regarding unresolved disputes with insurers over the terms of business interruption policies. They are asking for information to be provided by 20 May to help with a planned High Court test case.

Commenting on the news Partner Sonia Campbell, currently conducting a review of more than 500 policyholder wordings from the Hospitality Insurance Group Action (HIGA) and Partner Richard Leedham, who is representing 400 policyholders in the Hiscox Action Group (HAG) said:

"The FCA is asking policyholders and intermediaries to provide it with specified information.

It is said that the outcome of the FCA test case will be legally binding on the insurers that are parties to the test case in respect of the representative sample considered  - and that it will provide persuasive guidance for the interpretation of similar policy wordings and claims, that can be taken into account in other court cases, by the Financial Ombudsman Service and by the FCA in looking at whether insurers are handling claims fairly.  

The FCA says that it recognises that many claims will already be the subject of negotiation or other dispute resolution processes and that the proposed action is not intended to impact the normal claims process. It is designed to assist policyholders, and particularly SMEs, whose claims are being refused when they think the firm should respond. Further, it says that the intended action will not prevent individuals from pursuing issues through negotiated settlement, arbitration, court proceedings as a private party, or taking eligible complaints to the Financial Ombudsman Service.

We broadly support the FCA's engagement on these issues and we are pleased to see that the FCA is now engaging also with policyholders. Whilst we would encourage policyholders to provide the FCA with the information requested if they so wish, our view remains that because the FCA test case will not be determinative of individual policyholders' claims, policyholders should continue also to pursue their own insurance claims."

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