Home > Browne & Murphy News > UK Supreme Court ruling on Covid-19 business interruption claims may have major impact on FBD test case

Business Interruption Claims

Thousands of UK business affected by closure as a result of the Covid-19 lockdown are set to receive insurance payouts worth over £1bn following today’s decision of the UK Supreme Court in a test case brought by the UK’s Financial Conduct Authority (FCA).

The Court found that business interruption policies held by pubs and other affected businesses applied to lockdown closures and accordingly these businesses should be indemnified against losses arising from the Covid-19 lockdown.

In a statement this morning, the UK’s highest court said that around 700 policies at 60 different insurers could be affected by the judgment, in addition to the policies that were reviewed as part of the test case.

Implications of Ruling

The ruling has major implications for a similar test case before the Irish Commercial Court involving FBD Insurance. The insurer was sued by a number of pubs over its stance that closures due to Covid-19 were not covered under their insurance policies.

Judgement in that case was originally scheduled for today but has been deferred to next month to allow the parties involved to make legal submissions in light of the UK Supreme Court’s ruling.

FBD has made a €30m provision to cover payouts if the company loses the case, however market analysts and insurance industry sources believe this figure is significantly underestimated and could rise to as much as €140m.

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