A test case brought by the FCA against eight insurers in could have significant consequences for insurers, brokers and policyholders. We report on the latest from the High Court… 

16.35: Judge Flaux wraps up proceedings for the day. We’ve heard the opening salvo of the FCA’s case against policy wordings, and tomorrow we’ll hear more as the case continues 

16.25: Edelman - Are you really worse off with an all-risks [BI] policy? It’s not what insurers sell all-risks policies to be, narrower than a non-specific peril 

16.20: Risk consultant Branko Bjelobaba comments to Insurance Times: ’QC Edelman is saying that if a cataclysmic earthquake can be covered, then all of [this current pandemic] is in the scope of the risk. Anyone within a 25 mile limit is contemplating something pretty significant - not measles or mumps.   

’The nature and reaction to the disease is what is insured, and it must impact your area for it to be covered.  

’As the disease is everywhere, the distance requirement does not protect insurers - a severe epidemic (which includes new accepted notifiable ones). Why should one assume it does not encompass this one? 

’The policy is there to protect the insured from a wide-area disease that manifests itself everywhere, including the policy area’ 

16:14: We’ve heard the ‘but for’ test being used as a defence against paying out on the BI policies. This article explains the issue in more detail 

15:58: ’We’re looking at an exceptional situation’. The question is ‘does the insurance apply to it?’ Edelman QC 

15:55: Is [the denial of cover] a way for insurers to exclude the worst type of notifiable disease from their policies - Edelman QC 

15.53: Just because the pandemic was unprecedented doesn’t mean it isn’t covered by insurance policies, says Edelman QC 

15.50: Lord Justice Flaux says that the inclusion of geographical limits on the distance of a case of a disease from business premises serves no practical purpose in the case of a pandemic as it is automatically satisfied as the disease is everywhere 

15.48: Edelman QC argues that if there are cases of Covid-19 in a care home then it is reasonable to assume that there are cases in the wider community, as otherwise it could not have been transmitted to the residents of the care home 

15.45: Edelman - these policies are insuring a notifiable disease as long as it’s not too bad a notifiable disease. If it’s really bad, we won’t insure you. ’We’ve got the ‘but for’ causation to fall back on’ he says of the insurers’ argument 

15.40: Edelman QC: Insurers’ argument is that BI policies only triggered when you can prove a local case actually caused in itself directly your business to be closed down 

15.17: Break in proceedings as we contemplate FCA QC Colin Edelman going Donald Rumsfeld and citing ‘known unknowns’… 

15.15: QC Edelman cites several policy examples where once a disease has become ‘notifiable’, the BI claim is covered 

14.35: It boils down to an analysis of the insured peril not just focused on the word used, but the implications of the language, says Colin Edelman QC. He gave the example of RSA’s policy covering earthquakes, which opens them up to the risk of covering a cataclysmic earthquake eventhough the UK is not known for earthquake activity, and that therefore a ‘potential pandemic is within the ambit’ of these business interruption policies 

14.21: ’No restricion is placed on the geographical scope of such reaction’, argues QC Edelman, it is ‘only the disease that has to be in the relevant policy area’. So a wider scope must apply to the coverage of the business interruption policies 

14.18: QC Edleman argues that insurers are insuring against the ‘risk of outbreaks of infectious diseases’ so if the policy covers infections within a certain distance from a property, it is not covering a contamination of a property, so therefore must ’necessarily be contemplating something else happening that does have an effect on the business’, namely the ‘reaction of the authorities’ or the ‘reaction of the public’ 

14:05: The hearing is back in session for the second part of day one 

13.05: The hearing has broken up for lunch. Next up - causation. Stay tuned! 

12.50: QC Edelman says policyholders should be able to use a weighted average of reported cases for an area to determine whether it was likely that a case of Covid-19 occurred in the vicinity of a property. It would then be up to the insurer to advise as to why that approach was not appropriate on a case-by-case basis 

12.41: Insurers’ argument that NHS death data is not reliable to trigger the BI cover (because someone could have contracted Covid-19, then recovered, then died of something else) is ‘clutching at straws’ because the death merely shows that someone has had the disease in the area. Whether or not someone died from the disease is not relevant, argues FCA QC Colin Edelman 

12.05: Judge ‘thoroughly unconvinced’ by Zurich’s defence of its policy wording that the government is not a ’competent public authority’ 


12.00: For insurers to suggest there was no government requirement for prevention of access to premises defies any reasonable view. ’It’s both factually and legally wrong to suggest otherwise’ - QC Mulcahy 

11.55: Policyholders would have been in breach of policy conditions and the law if they had not obeyed government advice to close premises - QC Mulcahy

11.26: The Hospitality Insurance Group Action (HIGA), representing hotels, restaurants, bars, pubs and nightclubs was granted the right to intervene in the FCA test case at end of June 

11.10: 16 March deemed ’significant’ by the FCA as it is part of the ’government action or advice’ that triggered the business interruption policies by amounting to ’prevention of access, hindrance of use [and] business interruption’ 

11.05: Ban on mass gatherings is a ‘national strategy trying to deal with a national emergency’, says Mulcahy 

11.02: The FCA said in its 322-page submission that insurers ’have been adopting an unduly narrow approach’ and have been ’misguided’ in how they establish claim causation 

10:54: 16 March (Boris Johnson’s speech on avoiding social contact) was a key date in relation to the chronology 

10.50: Covid-19 recognised as an ‘emergency’ on 3 March, QC Leigh-Ann Mulcahy, for the FCA tells the hearing 

10.41: A reminder that the eight insurers are Arch Insurance (UK), Argenta Syndicate Management, Ecclesiastical Insurance Office, Hiscox Insurance Company, MS Amlin Underwriting, QBE UK, RSA UK, and Zurich Insurance 

10.34: The FCA estimates that there are 370,000 policyholders that could be affected by the test case, affecting more than 60 insurers 

 10.30: Proceedings kick off at the High Court