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FCA Business Interruption Insurance Test Case – Josephine Higgs

15th Sep 2020

The Financial Conduct Authority v Arch Insurance (UK) Limited and others [2020] EWHC 2448 (Comm)

In June 2020 the Financial Conduct Authority (“FCA”) brought expedited test case proceedings against eight selected insurers to determine whether certain representative business interruption wordings respond to COVID-19 related losses.  These proceedings led to an urgent, remote 2 week trial in July 2020.

Josephine Higgs of 7KBW, together with Philip Edey QC and Susannah Jones of 20 Essex Street, instructed by Sonia Campbell of Mischon de Reya LLP, acts on behalf of the Hospitality Insurance Group Action (“HIGA”), which represents insureds in the hospitality and retail sectors.

HIGA was one of two action groups permitted to intervene in the test case, and made written and oral submissions in relation to the RSA4 “Resilience” policy wording and the QBE1-3 policy wordings.

Judgment has today been handed down by the two-judge Court, Mr Justice Butcher and Lord Justice Flaux. Please view the judgment here.

The Court agreed with HIGA’s arguments that the “Notifiable Disease”, “Prevention of Access – Non Damage”, and “Enforced Closure” clauses in the RSA4 Resilience wording, and the “Murder, suicide or disease” clause in the QBE1 wording, provide cover for business interruption losses suffered by insureds as a result of COVID-19.

Consequential matters, including any applications for permission to appeal, have been adjourned to a later date.

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