As COVID’s impact on business continues, the question remains whether owners are eligible to obtain business interruption insurance recovery for lost revenue resulting from compliance with government shutdowns.
The answer to this question ultimately lies in the language of each businesses’ respective insurance policy, and regulators’ and courts’ interpretation of such language. This is a global question, not only because of the pandemic’s reach, but because various carriers in different countries / regions (indeed sometimes the same carriers), have different policy wordings, and interpretation is heavily influenced by each country’s legal and regulatory framework and precedents.
It is in that context that the United Kingdom Supreme Court, in the matter of The Financial Conduct Authority v. Arch Insurance (UK) Ltd., et al., issued, on January 15, 2021, one of the first definitive legal opinions on the circumstances by which an insurance policy could provide coverage to U.K. business owners, who collectively have lost billions of pounds in revenues due to COVID-related business interruption (the “FCA Coverage Decision” or the “Decision”).
The crux of the Decision is (a) an analysis of specific provisions in particular carriers’ policies, and (b) the Court’s rationale for why such provisions should extend protection (or not) in the COVID-context, even where such protection had not been previously found. Despite this matter being limited to particular carriers, the Decision will have precedential affect for any U.K. policy with similarly worded provisions.
As the Wall Street Journal noted, quoting several experts*: the FCA Coverage Decision, “decisively removes many of the roadblocks to claims by policyholders,” that could “prompt further claims because it broadens the circumstances in which policyholders can recover their losses…”. The immediate impact of the Decision will be to U.K.-based businesses that have the specific policy language analyzed by the Court. However, due to the unique context of the pandemic, the Decision may also influence regulators and courts in jurisdictions worldwide. Even in those, like the U.S., which typically are not influenced by foreign decisions, especially given the state-based patchwork of U.S. laws and legal opinions.
*Steinberg, J. and Scism, L., January 15, 2021, Insurers Face Big Payouts to U.K. Businesses Over Covid Disruptions, Wall Street Journal.
What our Experts are Saying:
Given the FCA Coverage Decision, Corporate Risk Solutions (“CRS”) strongly recommends those who have experienced business interruption, especially those in the U.K., review your insurance policies in detail, as you may be eligible for immediate recovery & relief. CRS is happy to conduct an analysis of specific exposures, policy language and assessment of your possible recoveries.
CRS is an independent advisor across the risk continuum, navigating clients through the otherwise opaque insurance marketplace.
If you want to learn more, give us a call: 212-686-4111