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Information on the Financial Conduct Authority’s Business Interruption test case

As the Covid-19 pandemic has evolved, AXA XL is alert to the significant challenges facing our customers. The pandemic has led to widespread disruption and business closures and we recognise that customers are keen to understand if their business interruption insurance policy will respond. This page contains information about the Financial Conduct Authority’s Business Interruption test case.

What is the FCA test case

The Financial Conduct Authority (FCA) recently announced their intention to obtain a court declaration, as part of a test case, to resolve causation issues and contractual uncertainty around the validity of many non-damage business interruption claims made due to the coronavirus pandemic (Covid-19).

The test case will consider a representative sample of non-damage business interruption policy wordings and determine the interpretation of certain clauses within those policies and whether they provide cover for Covid-19.

The timetable for proceedings

Following a court order on 16 June, it is expected that the test case will proceed on the following timetable:

9 June

FCA started claim in the High Court

16 June

Case management conference, at which the court fixed the timetable for the case and other procedural matters

23 June

Insurers file Defences

26 June

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

20-23 July and
27-30 July

8 day court hearing before Lord Justice Flaux and Mr Justice Butcher

The court’s judgement should be published shortly thereafter. There is the possibility that either party may appeal the decision to a higher court. We will not generally be making any changes to the position that has been communicated to insureds in respect of their claims until the final resolution of the test case after any appeal(s) have either been concluded or the time for appealing expired. It is anticipated that the case will be finally concluded within 12 months of the FCA commencing their claim.

Implications for AXA XL customers

AXA XL’s insurance carriers are not defendants in the test case. However, the outcome will provide us with guidance as to the interpretation of similar policy wordings subject to English law.

The court judgment may affect the outcome of your claim if:

  • the specific wording of your policy is being reviewed as part of the test case, or
  • there are points being considered by the test case that are relevant to your policy wording.

Working with our business partners, we have written to all customers with claims or complaints for business interruption losses related to Covid-19 under relevant non-damage business interruption policies and advised whether or not you are potentially affected by the test case.

Why isn’t your policy potentially affected by the test case?

The test case is not intended to encompass all possible claims under non-damage business interruption policies and claims. Where we do not consider that your policy is potentially affected by the test case we have written and told you why.

What if your claim has already been declined or you have made a complaint?

If your claim has been declined, or you have made a complaint and received a final decision letter, then the decision you have been given remains our final decision at the current time. However, once the test case reaches final resolution will consider whether our decision needs to be revised.

We will write to you again at that time. You do not need to take any further action.

If you have made a complaint but not received a final decision letter and our view is that your claim is one where the outcome may be potentially affected by the test case, then we will postpone our decision on your complaint pending the outcome of the test case.

What if you have a claim in progress or you have not made a claim?

Whilst the Court proceedings continue, we will continue to consider all claims made and give you our view on how your policy responds, including those relating to policies that are potentially affected by the test case.

On final resolution of the test case, we will re-visit our claims decisions to ensure that they are in not impacted by the ruling of the Court. We will write to you again at that time to confirm whether or not we consider that the position of your claim has changed. You do not need to take any further action.

If you have not yet made a claim, and wish to await the conclusion of the test case, we will handle your claim at that time taking into account any impact of the ruling of the Court.

Your Financial Ombudsman Service (FOS) rights

Your FOS rights are not affected by the test case. If you are unhappy about the outcome of your complaint you can still refer it to the FOS free of charge.

The FOS has provided information on complaints related to business interruption insurance, which you can find here.

Staying informed

If you are a customer who is potentially affected by the test case then we will write to update you when the outcome is known.

We will also keep this page updated to reflect any key developments in the court proceedings.

Further information on the test case from the FCA can be found here.

You may wish to subscribe for email updates on business interruption and the test case from the FCA here or via their webpage.