FCA and insurers file 'leapfrog' appeal to Supreme Court in COVID-19 BI test case

The UK’s Financial Conduct Authority (FCA) has filed a 'leapfrog' application to the Supreme Court to appeal the  High Court's ruling in the COVID-19 business interruption insurance test case.

The regulator, along with the eight insurers and two intervenors that participated in the test case, agreed that the test case would be suitable for a so-called 'leapfrog' appeal direct to the Supreme Court, in a move aimed at reaching an expedited resolution.

Hiscox, together with certain other insurers and the FCA, have taken the necessary procedural step of applying to the High Court for a leapfrog certificate before the statutory deadline.

However, Hiscox stated that it has not yet made a decision on whether it will seek to appeal.

The FCA said that it is working with the insurers on a range of issues whereby an appeal process would not be required, and payments would be made on eligible claims as soon as possible. It noted that the 'leapfrog' application has been filed on a "precautionary basis" in the event that this agreement is not reached before the next hearing.

At the next hearing on October 2, the Court will decide the appropriate declarations to be made to give effect to the judgment it handed down on September 15 - as to how the conclusions set out in the judgment should be applied to the claims and circumstances of individual policyholders.

On September 15, the UK High Court handed down judgment in favour of the arguments advanced for policyholders by the FCA on the majority of the key issues.

The ruling clarified that fewer than one third of Hiscox's 34,000 UK business interruption policies may respond to pandemics. Coverage under these policies is essentially limited to those customers who were mandatorily closed by Government orders, and then only in certain circumstances.

As a result, the specialist re/insurer estimates additional COVID-19 claims arising from business interruption to be less than £100 million net of reinsurance. This encompasses claims from all divisions including Hiscox Re.

The group further stated that in the event that any party seeks permission to appeal, Hiscox may remain a party to any subsequent proceedings which could impact its ability to progress claims until the final outcome of the industry test case is known.