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FCA business interruption test case – the judgement is in

Why was there a need for a test case and what was the purpose?

In some instances, there were doubts over the appropriate interpretation of the insurers wordings which led to uncertainty and disputes, with many policyholders having what they believe to be valid claims rejected by their insurer.

The intention was to try and help resolve some of the legal uncertainties around business interruption (BI) insurance policy coverage and how various BI policies respond to COVID-19 related claims.

For a more detailed history click here to see out previous Blog on the “test case” published in July.

What was the test case intended to achieve?

That for those eight insurers involved in the test case the decision would be legally binding and in addition, that it would provide persuasive guidance for the interpretation of similar policy wordings and claims that could be considered in other court cases, even if on a different wording.

What did the judgment decide?

As was expected the judgement is highly complex and will take time for all parties involved to fully review it. Only eight insurers’ policy wordings were selected for review and the policy wordings were not specific Real Estate wordings.

At Arlington, we have written to the insurers that we trade with and asked them to confirm their position following this judgement, with particular focus on their Denial of Access cover, and, the Actions of Competent Authorities clause.

In the meantime there have been a number of statements and press releases : –

Financial Conduct Authority (FCA)

“The judgment is complex, runs to over 150 pages and deals with many issues.” “Insurers should reflect on the clarity provided here and, irrespective of any possible appeals, consider the steps they can take now to progress claims of the type that the judgment says should be paid.  They should also communicate directly and quickly with policyholders who have made claims affected by the judgment to explain next steps.” The FCA’s legal team at Herbert Smith Freehills have published a summary on their website, which may be referred to for further detail. Click here for the full FCA press release.

Also following the judgment from the High Court, the FCA have issued a Dear CEO letter outlining their expectations of insurers following the judgment.

Association of British Insurers (ABI)

“This is a complex judgment spanning 162 pages and 19 policy wordings and it will take a little time for those involved in the court case to understand what it means and consider any appeals. Individual insurers will be analysing the judgment, engaging with the regulator, taking account of the appeal process and keeping their customers informed in the period ahead.” Click here for the full article.

British Insurance Brokers’ Association (BIBA)

This was a complex situation requiring legal consideration of the many different issues of proximate causation and wording interpretations. It was pleasing that the ruling provided clarification on some key issues….” and they went on to say – “We recognise how important this case is for customers and the insurance industry alike and we will study the judgement in detail over the coming days while waiting to see if any of the parties appeal.” BIBA has been working with the law firm Weightmans and their insight on the judgement can been found here.

What happens now?

It could be said that this is really just the beginning, not the end, of the whole issue for everyone involved, who now have to establish what the decision actually means.

The FCA have already indicated that the parties have discussed the possibility of an expedited appeal, which could move straight to the Supreme Court, and a consequentials hearing (submissions from the parties on the appropriate declarations to be made by the court and on any applications for appeal) is set for the 2nd October to allow permission applications to be heard. What remains to be seen is the extent of any appeal and the issues to be considered in further detail.

Arlington will continue to closely monitor the situation and provide updates as they are released. If in the meantime you wish to discuss this matter please do not hesitate to contact us.

FCA business interruption test case judgement date released.

The Financial Conduct Authority (FCA) says the keenly anticipated judgement in the COVID-19 business interruption test case will be handed down next week and will be published on the FCA’s website on September 15th at 10.30am

The High Court hearings were held over eight days in July, ending with submissions made by the FCA, Hospitality Insurance Group Action, Hiscox Action Group and eight insurers who agreed to be part of the case.

The insurers involved are Arch, Argenta Syndicate Management, Ecclesiastical Insurance Office, Hiscox, MS Amlin, QBE, Royal & SunAlliance and Zurich.

The court will also decide whether an appeal will be allowed.

Government reveals planning shake-up

The Housing secretary Robert Jenrick recently launched a long-awaited white paper Planning for the Future to consult on reform to the planning system.

“This consultation seeks any views on each part of a package of proposals for reform of the planning system in England to streamline and modernise the planning process, improve outcomes on design and sustainability, reform developer contributions and ensure more land is available for development where it is needed.”

These are “landmark” reforms to the planning system, with the introduction of zoning, new developer levies and a requirement for new local plans.

Key proposed reforms

  • Section 106 developer contributions and CIL to be replaced with a new Infrastructure Levy. This would be a fixed proportion of the value of the development, above a set threshold, with revenues spent locally on infrastructure projects and new affordable housing.
  • The planning process to be overhauled and replaced with a ‘clearer, rules based system’.
  • A new zoning system that categorises land into growth, renewal or protected areas. In growth areas, outline approval would be automatically granted for types of development specified in local plans.
  • Every area to have a zone-based local plan in place, and local housing plans to be developed and agreed in the reduced time frame of 30 months.
  • Local communities to be consulted from the outset of the planning process, with greater input into local plans and the planning system made more accessible through technology.
  • More building to be allowed on brownfield land, with greenbelt land protection to continue.
  • A focus on beauty and green space, with a ‘fast-track system for beautiful buildings’, new local design guidance, and all new streets to be tree lined.
  • All new homes to be carbon neutral by 2050.

Please don’t hesitate to contact us if we can help you with any of the issues mentioned in this article or for advice and help with your insurance needs in respect of any property development related matters such as legal indemnity insurance, construction risk solutions and risk management.

Business Interruption insurance – Financial Conduct Authority (FCA) “Test Case”

Why the need for a test case?

In some instances, there are doubts over the appropriate interpretation of the wording(s) which has led to uncertainty and disputes, with many policyholders having what they believe to be valid claims rejected by their insurer.

What is the purpose?

The intention is to try and help resolve some of the legal uncertainties around business interruption (BI) insurance policy coverage and how various BI policies respond to COVID-19 related claims.

Which Insurers and wordings are affected?

Following a review of 500 relevant policies from 40 insurers, the FCA has invited eight firms to assist the watchdog by participating in the High Court test case. A full list of insurers and the wording can be found on the FCA website.

What will the test case achieve?

For those insurers involved in the test case the decision will be legally binding but in addition it will also provide persuasive guidance for the interpretation of similar policy wordings and claims that can be considered in other court cases even if on a different wording.

The FCA have said – “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. It will not determine how much is payable under individual policies but will provide the basis for doing so.”

What’s happened so far and what’s the timetable?

  • 9 June – FCA started claim in the High Court (click here to see the Particulars of the claim)
  • 16 June – Case management conference, at which the court fixed the timetable for the case and other procedural matters
  • 23 June – Insurers file Defences (click here to see the insurers defences)
  • 26 Jun – Further case management conference, at which the court will deal with any outstanding procedural matters to ensure the case is ready for trial
  • 3 July – FCA files Reply
  • 1st half July – Skeleton arguments and replies served and also the Defendants’ joint skeleton argument on the principles of contractual construction (interpretation) and Defendants’ joint skeleton argument on causation (of loss).
  • Published 17th July Agreed List of Issues and Common Ground summarises what is and is not in dispute between the parties. This supersedes the Questions for Determination.
  • 20-23 July and 27-30 July – 8-day court hearing during which the daily court transcripts are being published.

Undoubtedly the results of this case could have far reaching consequences and a decision either way will provide a degree of clarity around where coverage may respond. This will enable all involved to better understand their own position.

Arlington will continue to closely monitor the situation and provide updates as they are released, and once the case has concluded we will review what impact the decision means for our clients.  If in the meantime you wish to discuss this matter please do not hesitate to contact us.

Post Covid-19 start-up –what property owners need to consider

As property owners you will be responsible for a varied range of building types such as shopping centres, individual industrial units, industrial/business parks, office blocks, high street units etc.  The degree of direct control and responsibility you or your managing agent need to exercise will vary so it is advisable to agree between you who will be responsible for what and when.  Tenants also have a responsibility to ensure they resume their operations safely and so you should involve them in any plans.

Each premises will need to be individually risk assessed due to the differing type of property and occupation to establish specific needs.

Remember that all applicable health & safety legislation and regulations remain fully in force such as: –

  • Health & Safety at Work Act 1974
  • Management of Health & Safety at Work Regulations 1999
  • Workplace (Health, Safety & Welfare) Regulations 1992
  • Fire Safety Regulatory Reform Order

Reopening premises


Inspections and reinstating the utilities and services may be the sole responsibility of the tenant or may involve the landlord or managing agent. This process should be carefully planned to ensure the building utilities and services are brought back into operation in a controlled and safe manner. It is important to initiate and keep regular communication with all tenants and to co-ordinate responsibilities. This is especially pertinent for multi-tenanted buildings and high-rise offices, to agree a strategy and maintain social distancing in communal areas.


As a property owner or managing agent you should consult with tenants about the return to the premises. Keep up to date with the latest government guidance to help them plan.

Tenants must consult with staff and employee representatives and consider the risks of anyone being harmed in the workplace and carry out a suitable and adequate risk assessment.

Some may be anxious about their safety when returning to the premises, and all tenants/managing agents should talk about any concerns and try to resolve them together.

Risk Management

Considerations will vary depending on the site layout, equipment and processes involved, and should have been assessed in the planning stage.

These are some things you should consider and manage:

  • Update risk assessments and working procedures in respect of the Covid-19 amendment.
  • For multi-tenanted buildings how to maintain social distancing in communal areas under your responsibility such entrances, lifts, toilets, changing/showers facilities.
  • Confirm that your employees have had training refreshed in respect of Covid-19 for risk assessments and method statements.
  • The supply and provision of PPE where this is required for work-related activities.


Keep records your assessments and update to reflect any changes. Communications with your employees and tenants about what the new changes may mean, ensuring that they fully understand and above all document and record all training and information going forward. All actions, systems and procedures must be documented – you may be required to produce evidence of compliance to a regulator.


Consider the layout of your premises and areas you are responsible for, prior to opening for business. For those areas you are responsible for prepare a schedule of cleaning steps covering and communicate with tenants of the building.

For multi-tenanted buildings where you have responsibility for common areas this will include the “effective management” of welfare arrangements such as reception lobbies, plant rooms, elevators, changing areas, locker rooms, shower/washrooms and toilet facilities, welfare etc.

Water systems checks

Legionella checks are very important because standing water can generate Legionella bacteria growth and the generally accepted advice is that temperature control is the traditional strategy for reducing the risk of legionella in hot and cold-water systems.

  • Cold water systems should be maintained, where possible, at a temperature below 20°C.
  • Hot water should be stored at least at 60°C and distributed so that it reaches a temperature of 50°C (55°C in healthcare premises) within one minute at the outlets.

Building Inspection

The following are some of the main checks that you may need to make on general building condition and the fire & security protection:

  • perimeter security including fences, gates, doors, windows, shutters etc.
  • internally for signs of damage or deterioration
  • Fire alarm systems, access control, CCTV systems, intruder alarms, fire doors, fire extinguishers, emergency lighting/signage and emergency exits.
  • Review the alarm keyholders to ensure adequate coverage is provided and ensure the intruder and fire alarm system Alarm Receiving Centres are informed of any changes.
  • When reinstating water supplies that have been isolated check for any leaks.
  •  Where automatic fire sprinklers systems are installed, please click here for a separate detailed guidance note.

To read more on this subject click here for detailed guidance sheet “Post-coronavirus start-up guidance – Property owners” issued by AXA Insurance. 

For the UK Gov Coronavirus (COVID‑19) guidance and support website click here.

If we can help you regarding any of the issues mentioned, or if you need any further information or advice on this subject please don’t hesitate to contact us.