The FCA test case in relation to business interruption claims

The Financial Conduct Authority (FCA) has recently commenced a test case in the High Court which aims to resolve a number of important issues in relation to coverage and causation that are relevant to the operation of insurance policies that provide ‘non-damage business interruption’ cover and the extent to which they cover losses arising from Covid-19. It will do this by considering cover, on the basis of agreed facts, under a representative sample of policy wordings from certain selected insurers.

The test case is presently scheduled to be heard by the High Court on 20th – 23rd July and 27th – 30th July 2020. The court’s judgment should be published shortly thereafter, subject to any appeal against the decision which is likely to be made directly to the Supreme Court.

Whilst Folgate Insurance Company Limited (FICL) is not involved in the test case and therefore its policy wordings are not under review, insurers generally will be expected to apply the principles contained in the judgment when reaching a conclusion on cover for claims made in respect of Covid-19 losses upon similar policy wordings.


What are the implications of this for Folgate policyholders?

In view of this, the FCA asked insurers to undertake a review of their policy wordings to assess if those policy wordings provide ‘non-damage business interruption’ cover, and, whether or not such ‘non-damage business interruption’ policies contain the types of clauses which are being considered by the High Court.

The following policy wordings were identified as policies which contain ‘non-damage business interruption’ clauses:



FICL subsequently undertook an assessment of the above listed ‘non-damage business interruption’ policies and have concluded that any claim (or complaint) submitted for consideration under those policies will not be affected by the final resolution of the FCA test case. This is because the wording of the above policies is materially different to the wordings being considered by the High Court in the FCA test case.

The FCA has made clear that the test case is not intended to encompass all possible disputes, but to resolve some key contractual uncertainties and causation issues to provide clarity for policyholders and insurers.  The FCA’s Guidance, at paragraphs 4.9 and 4.10, states that the test case is specifically not intended to resolve:

  1. coverage issues relating to clauses that identify an exhaustive list of diseases in respect of which cover is provided, which does not include Covid-19; and/or
  2. coverage issues relating to clauses which require the disease to be present on the insured premises.

FICL’s ‘non-damage business interruption’ policies do not contain the types of clauses which are being considered by the High Court and the outcome on our decision on cover in respect of any related claims or complaints will, therefore, not be affected by the outcome of the FCA test case.  This is because those policy wordings provide cover only in respect of the specified diseases (which do not include Covid-19) and/or where a specified disease is present on the insured premises.


Communications with non-damage business interruption policyholders

FICL are committed to adhering to the timelines set out by the FCA and as such have worked with its legal panel to create communications for customers who have made a business interruption claim (or complaint) relating to Covid-19 in respect of its ‘non-damage business interruption’ policies.

FICL wrote to all relevant non-damage business interruption policyholders directly by email on 13th & 14th July 2020, copying in the holding insurance broker for information, explaining the implications of the test case in respect of their claims and complaints relating to Covid-19.

If we don’t have a policyholders’ email address, the email communication was sent via the holding insurance broker who were asked to share the letter with the specified FICL policyholder.


Further information from the Financial Conduct Authority (FCA) &/or the Financial Ombudsman Service (FOS)

Further information relating to the Test Case can be found on FCA’s dedicated web page:

You may wish to subscribe for e-mail updates from the FCA on the FCA’s dedicated webpage (see above) to obtain regular notifications of the developments in the Test Case.

In addition, the Financial Ombudsman has published further information for consumers regarding Covid-19 on its web page which can be accessed via the following link:

We trust the above gives you all of the information you need, however if you have any queries please do not hesitate to write to