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.