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Business Interruption Consultancy

Covid-19 Business Interruption – News and Views

Contact us for a free consultation on your policy wording

We are now looking to review as many different policy wordings as we can so please contact us for a free consultation on your wording and the issues you will face when in the near future you will be required to prepare your claim for business interruption

1st May 2020 – The FCA takes action on policy interpretation!

We are pleased to see that the Financial Conduct Authority (FCA) has now stepped up to the plate to provide legal clarification on the interpretation of the disputed cover for business interruption in many policies.

See: FCA statement – insuring SMEs: business interruption 

Having written to Caroline Wayman, chief ombudsman and chief executive of the Financial Ombudsman Service (FOS), with our views on the matter and offering to work with them in obtaining this legal interpretation, we feel we may well have been instrumental in getting this initiative off the ground and getting the FCA in the welcome but unusual position of being ahead of the game.

We will be continuing to offer our expert viewpoint to the FCA as it is important that the court determination is arrived at after proper consideration of the policyholder’s position and the expert views of those who represent them, and not just insurers and the FCA alone.

Although we are pleased that the route of Group Action that we eschewed (see below) has been stopped in its tracks, now policy interpretation will be obtained by the FCA there still remains the issue of quantifying the value of loss at the point that the businesses concerned are allowed to re-open.

With the increasing likelihood of “liability” as a defence being removed insurers will inevitably revert to challenging the basis on which the loss is calculated.

Those unused to these matters will have to start getting used to words such as “causation”, “remoteness” and “counterfactual assumptions” being readily bandied about.

We have a clear idea on how these losses need to be assessed but we are validating these with legal advice and counsel opinion from two eminent QC’s.

24th April 2020 – Which way to go to get business interruption paid for?

Pragmaticum is advising its clients on the interpretation of their business interruption policy wording and in particular the Public Authority or “notifiable disease” extension.  We have made initial submissions where an interim assessment of business interruption loss has been made.

We are currently in discussions with a number of parties on the best option for those whose claim has been denied.  At this time we favour an approach involving the Financial Ombudsman Service (FOS) with whom we have a good working relationship as a result of past political initiatives and as the presenter of complex cases to the Lead Ombudsman.  Because the service is free to use and is expected to produce an early decision on how the policy wordings should be interpreted, we feel that the service should be looked at favourably. 

We do not disregard the number of issues and legal arguments that will need to be considered and we are obtaining leading opinion, however initial discussions seem to concur with our own thinking.  Policy holders should be aware that not only is the broad issue of cover in need of determination but also the interpretation of the cover itself, and in particular what the “but for” or comparative position is actually defined as.  That is to say, is it with the assumption that the business is open for trade but the pandemic is still ongoing, or do we assume it is excluding Covid-19 as was the “normal” situation before lockdown?

Pragmaticum will be clarifying each element such that its assessment of loss will complement the legal opinion and we will be presenting the case to FOS for consideration.