Blackpool business group's delight over Supreme Court insurance win

The Financial Conduct Authority has successfully won a case in the Supreme Court to make insurers pay out over for business interruption caused by the coronavirus crisis.

In the landmark £1.2bn case, the UK’s highest court “substantially allowed” an appeal by the city watchdog FCA over the wording of policies which some insurers argued did not cover the pandemic.

Paul Foster, FSB development manager in the county, said: “Figures suggest that there could be 370,000 businesses across the UK who will be in line for a payout so we expect there will likely be hundreds if not a couple of thousand businesses on the Fylde Coast who could be impacted.

“The FSB has worked with the Financial Conduct Authority on this case and our members have provided evidence and case studies which have helped to bring about this result.

“We know hoteliers and the wider tourism sector has been affected by the refusal to pay out and for them this will come as very welcome news which can help them keep going through these incredibly challenging times.

“Policy holders should contact their insurance company or broker to check eligibility – not all business interruption policies are likely to be covered by this verdict, but certainly those with infectious diseases specifically mentioned in the policy should be covered, as well as some with cover relating to ‘denial of access’.

“We believe The FCA will publish guidance for businesses with policies and a list of business interruption policy types that potentially respond to the pandemic.”

Federation of Small Businesses national chairman Mike Cherry said: “This judgement is a big victory. It cements the high court’s decision to grant businesses left on the brink the insurance pay-outs they are rightfully owed.

“For many, it has been a long and difficult road to get to this stage so this will bring clarity and hope to the thousands left in financial limbo for almost a year.

“While this is good news, and while the law has to follow procedure, it’s disappointing that so many small businesses have had to wait to get the money they desperately need under policies they believed were there to protect them, policies they bought in good faith.

“Businesses deserve to be protected in a timely way, but instead they have been failed by their insurers and are now trying to make up for lost time. Providers must now pay-out quickly, and consider the steps they can take to progress these claims in a swift and seamless manner. Any paperwork required of claimants shouldn’t be onerous or time-consuming.

“Small businesses contribute trillions to the economy. The Financial Conduct Authority (FCA) was right to argue that disease or denial of access clauses within interruption policies should trigger pay-outs in the event of coronavirus-linked disruption. We are hugely grateful for its work in this space.”

In September, the High Court ruled on several “lead” insurance policies, but a group of insurers immediately appealed.

Announcing the Supreme Court’s ruling on Friday, Lord Hamblen said: “The appeals of the Financial Conduct Authority and the Hiscox Action Group are substantially allowed and the insurers’ appeals are dismissed.”

The court considered various types of clauses which featured in a number of insurance policies including “prevention of access clauses”, which are triggered by “public authority intervention preventing access to, or use of, the business premises”.

Summarising the Supreme Court’s decision, Lord Hamblen said the High Court’s interpretation of those clauses was “too narrow”.