business interruption insurance insured ABI BIBA FCA supreme court test case covid-19 coronavirus turnover loss FOS litigation

Insurance industry’s reaction to Supreme Court BII test case positive for businesses

The Supreme Court Business Interruption Insurance (BII) test case has brought clarity to policyholders who have been affected by COVID-19 and have previously been denied BII cover by their insurers. This is causing insurers to reassess policyholders’ disputes on a case by case basis. If you are an affected business, you should seek legal advice as soon as possible and our specialist financial services litigation team can be instructed to assist.

Since the Supreme Court handed down its judgment in the Business Interruption Insurance (BII) test case, confirming that businesses affected by the first national COVID lockdown are entitled to payments from their business interruption insurance policies, clarity has been given to policyholders who have been affected by COVID-19 and have previously been denied BII cover by their insurers. This is causing insurers to reassess policyholders’ disputes on a case by case basis.

If you have been affected by your insurer’s refusal to pay out for business interruption insurance, you should seek legal advice as soon as possible and our specialist financial services litigation team can be instructed to assist.

How are insurers responding to the business interruption insurance finding?

In the Supreme Court test case, insurers who had sold business interruption insurance products (Arch, Argenta, Hiscox, MS Amlin, QBE and RSA) unsuccessfully argued that their policies did not cover COVID-19 because it was a global pandemic rather than a local event. 

Various insurers and representative bodies have highlighted the complexity of business interruption insurance matters but the clarity that the Supreme Court judgment brings and how each case will now need to be assessed individually. This is positive news for many SMEs and businesses affected by insurers’ refusal to pay out under policies and policyholders with affected claims can expect to hear from their insurer soon.

Businesses should therefore seek legal advice on their case now. We expect to see the number of disputes increasing and many businesses pursuing action through complaints, the Financial Ombudsman and litigation, with all of which our BII team can assist.

“The insurance industry expects to pay out over £1.8bn in Covid-19 related claims across a range of products, including business interruption policies. Customers who have made claims that are affected by the test case will be contacted by their insurer to discuss what the judgment means for their claim. All valid claims will be settled as soon as possible and in many cases the process of settling claims has begun. Some payments have already been made where valid business interruption claims have not been impacted by the test case ruling”

Huw Evans, Director General, Association of British Insurers (ABI)

“The application of COVID-19 as a peril in relation to business interruption insurance is a highly complex matter which is why, from the outset, we welcomed the FCA intervention in bringing this test case and the ultimate clarity the judgement now brings…What is needed now is for insurers to act swiftly to settle claims fairly and to clearly communicate the next steps in the process with brokers to allow them to help and advise their customers”

Steve White, CEO, British Insurance Brokers’ Association (BIBA)

“ASML will proceed to determine all outstanding claims and complaints, applying the Supreme Court’s judgment in so far as possible and will write to policyholders individually with its decision”

Argenta Syndicate Management Limited

“We welcome the clarity that the Judgment provides and the processing of claims has begun. Any issues not addressed by the Judgment will be assessed on a case-by-case basis as part of the normal insurance loss adjustment process for claims. This will apply to all government restrictions, whether national or local, provided that a relevant policy was in force at the start of the relevant lockdown period”

Hiscox Limited

“We take our responsibility to support our policyholders extremely seriously and understand the challenges and uncertainties they face during these extraordinary times. We remain committed to providing an outcome for all affected policyholders as quickly as possible, by assessing all eligible claims in light of this judgment”

MS Amlin

“We are acutely aware that many of our customers have and continue to face an extremely concerning time and will be concerned to know the impact of the Supreme Court’s findings on their claim or complaint. With this in mind, we are working to consider the findings of the Supreme Court and will contact all policyholders regarding its impact on your claim or complaint as quickly as possible”


“We recognise the adverse impact that Covid-19 is having on businesses, and that customers with Business Interruption insurance are keen to understand if their insurance policy will respond”


Why is the FCA’s BI Insurance test case important?

Policyholders are generally not sophisticated or well-resourced insurance buyers in the way a large corporate may be. It is with that in mind, the FCA, as Claimant in a claim brought under the Financial Markets Test Case Scheme, sought legal certainty for the benefit of all stakeholders, and to achieve this urgently in the public interest to facilitate the continuation of businesses to the extent they have survived in the meantime or to bring some relief and opportunity for those that have not.

Given the complexity of business interruption claims and the legal uncertainty surrounding their enforcement (the FCA have issued a test case recently in the High Court), it is advisable that you seek expert legal advice early in order to prepare your Business Interruption Insurance claim. We have specialist knowledge and experience in working with SMEs, assisting them in litigation against banks (such as the GRG complaints scheme), large financial institutions and insurers.

Why use a solicitor instead of a broker to submit your BII Claim?

Our Business Interruption Insurance Claim Solicitors add value by optimising the value of the claim. There may be heads of claim which have been missed or not considered by a non-lawyer such as a broker. It is important to instruct specialist lawyers to present your claim in a way that makes it easy for the insurer to accept and less likely to refuse.

If the insurer refuses any part of the claim, a business will also need a lawyer to pursue litigation, which a broker cannot do. It is very important to consider litigation at the outset when seeking to negotiate a good settlement. Our litigation lawyers are experienced in settlement negotiations to get an optimum award for our clients.

Following our fixed fee review (done by a solicitor and a barrister in conference, we may offer to take on your case on a no win no fee basis such as a Damages Based Agreement (DBA). We factor in your risk-appetite, costs sensitivity and determination and depending on the merits of your case, we are open to considering contingency fee agreements with you (such as DBAs) if your case is of high value.

Instruct our Business Interruption Insurance Litigation Lawyers

​We​ ensure that we provide the best possible outcome for our clients by conducting in depth investigation and research into the realistic prospects of a case before selecting the appropriate course of action in order to reduce time and expense. Liability for costs is always an issue in litigation and based on our extensive litigation experience we provide our clients with as much strategic, practical as well as carefully considered legal advice in order to ensure minimum risk in respect of costs. Where appropriate we encourage the use of alternative dispute resolution (such as mediation and without prejudice negotiation) and our lawyer’s negotiation skills are first class. If early settlement at advantageous terms is not possible, we are extremely experienced and capable at navigating our clients through the litigation process.


The Limitation Act 1980 sets out strict statutory deadlines within which you must bring litigation claims. Your legal rights will become irreversibly time-barred if you fail to take legal action (or defend a claim on time). Therefore, you should seek specific legal advice about your legal dispute at the very first opportunity so that you understand the time you have left. Failure to take advice or delay in taking action can be fatal to your prospects of success.

Please note that for regulatory reasons we do not offer any free advice.