Insurers to continue BI dispute at fast-tracked Supreme Court appeal

Supreme Court

Six insurers and the Financial Conduct Authority have been granted permission to fast-track an appeal of last month’s business interruption test case judgment to the Supreme Court.

Ecclesiastical withdrew its application to appeal to the Supreme Court on Friday in light of the FCA’s decision not to appeal the court’s finding that Ecclesiastical policies did not respond to pandemic by virtue of an “infectious disease carve-out.”

Gavin Kealy QC, representing Ecclesiastical, said during proceedings on Friday: “Given that the FCA is not appealing the decision in relation to Ecclesiastical, Ecclesiastical is withdrawing its appeal to go to the Supreme Court, which was prophylactic in the first instance.”

However, he added: “Ecclesiastical is maintaining its prophylactic application to the Court of Appeal to cross appeal as a matter of caution.”

In a statement, an Ecclesiastical spokesperson said: “Due to the fact that the FCA has confirmed it is not appealing the High Court’s judgment which found that losses arising from the Covid-19 pandemic are not covered by Ecclesiastical Insurance’s business interruption policies, we will be taking no further part in any Supreme Court proceedings on this matter.

“We recognise that this has been a difficult and uncertain period for customers and we now hope the Judgment provides the certainty and clarity that the Test Case was designed to create.”

On 15 September, the High Court ruled that some of the businesses that held business interruption insurance and were forced to close as a result of the coronavirus pandemic could be entitled to be compensated by the insurers involved in the test case.


Following a deadline on Monday, the FCA published ‘leapfrog’ applications made by seven of the eight insurers that participated in the test case during the summer, with only Zurich choosing not to file an application.

The applications were then characterised as “precautionary”, with the FCA and insurers hoping to come to an agreement on outstanding issues of dispute without the need for an appeal in advance of a hearing on Friday. However, such an agreement was not reached.

The six insurers taking the case forward to the Supreme Court alongside the regulator are Arch, Argenta, Hiscox, MS Amlin, QBE and RSA.

The court also granted a certificate to the Hiscox Action Group, which represents more than 400 policyholders and has participated in the test case as an intervening party.

QIC Europe Limited, a Qatar Insurance Company subsidiary, failed in its bid to intervene in the appeal.

The conditions for an appeal of a High Court judgment directly to the Supreme Court rather than the Court of Appeal are laid out in the Administration of Justice Act (1969).

In this instance, the court assessed insurers’ applications against the criteria “that a point of law of general public importance is involved in the decision”, set out in section 12, paragraph 3A of the act.

Granting permission to appeal directly to the Supreme Court, Lord Justice Flaux, who is adjudicating on the test case alongside Lord Justice Butcher, said: “We are both satisfied that all of the conditions in section 12, paragraph 3A are satisfied in this case so it is entirely appropriate that certificates should be granted.”


Following the conclusion of Friday’s proceedings, the appealing insurers faced criticism for their decision to appeal the High Court’s judgment.

While the Hospital Insurance Group Action welcomed leapfrogging of the Court of the Appeal, they attacked insurers’ decision to appeal in the first place.

Sonia Campbell, a partner at Mishcon de Reya representing HIGA, said: “Insurers’ approach in first seeking, and now obtaining, leapfrog certificates shows the lengths that they will go to to delay and defer decisions on paying out claims.

“Whatever happens after today’s hearing, policyholders should be under no illusions that recovery of claim proceeds will be easy. It is only by joining a well-resourced and properly funded group, that they can safely do that.”

The group has participated in the test case as an intervening party but, unlike the HAG, did not seek a certificate to appeal.

Richard Leedham, a partner at Mishcon de Reya representing the HAG, also criticised insurers, saying: “Our group is made up of 400 small businesses from across the UK and they are in desperate need of the payouts that they deserve and the court’s judgment says they are entitled to.

“Hiscox and other insurers seem content to delay the process further, which is hugely irresponsible and is putting more pressure on businesses and jobs they were meant to protect.”

A poll of the industry conducted by Post in advance of Friday’s hearing found that of the 114 respondents, 35% thought insurers should not have applied to the court for permission to appeal.

Meanwhile 30% said insurers should have probably appealed and 11% said they definitely should have appealed.

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