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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

In May 2020 the Financial Conduct Authority (FCA) 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 considered a representative sample of non-damage business interruption policy wordings to determine the interpretation of certain clauses within those policies and whether they provide cover for COVID-19.

The timetable of proceedings

Following a court order on 16 June 2020, the test case proceeded on the following timetable:

After hearing the test case brought by the Financial Conduct Authority on Business Interruption wordings, the High Court published its judgment on 15 September 2020.

Six of the parties to the test case, including the FCA, appealed directly to the Supreme Court, challenging a number of the conclusions made by the High Court. The Supreme Court heard the case in November 2020, and its decision was handed down on 15 January 2021. As the Supreme Court is the highest court in England and Wales, this decision represents a final resolution to the test case and it cannot be appealed further. A copy of the judgment can be found on the FCA website.

Implications for AXA XL customers

AXA XL’s insurance carriers were 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 will affect the outcome of your claim if:

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


Working with our business partners, we have previously 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.

We are now reviewing the Supreme Court’s decision, which substantially allows the FCA’s appeal and dismisses the Insurers’ appeals. We expect that it will take us some time to review this lengthy judgment and apply its findings to the individual circumstances of each customer’s claim. As a reminder, the test case does not encompass all possible disputes and does not determine how much is payable under individual policies. While we are not yet in a position to provide a final decision on each claim, we commit to doing so as soon as reasonably possible and we will write to customers again at that time.

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, now the test case has reached final resolution we 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 was that your claim is one where the outcome may be potentially affected by the test case, then we postponed our decision on your complaint pending the outcome of the test case. This means that we did not send you a final response within eight weeks as indicated in our Complaints Process document.

If after our review of the judgment, we conclude that your claim is now covered, your claim will be progressed by our claims team and the complaints team will review your complaint once your claim has been progressed.

If part of your complaint is not covered by the test case, we will continue to deal with that part of your complaint and we will contact you separately about it.

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

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.

Now that there is final resolution of the test case, we will re-visit our claims decisions to ensure that they are 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, we will handle your claim on receipt 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

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.