Insurance and Financial Services All-Party Parliamentary Group response to BI test case


Craig Tracey MP, Chair of the Insurance and Financial Services All-Party Parliamentary Group (IFSAPPG) responds to the test case judgment.

As the Chair of the IFSAPPG, I welcome the High Court’s decision on the Financial Conduct Authority's (FCA) test case and this judgment should bring greater clarity to the situation for This

The judgment is incredibly complex, with over 150 pages covering 19 different policy wordings. Therefore, it is completely understandable that it will take time for insurers to appropriately apply the judgment to individual policies and for any party to appeal decisions that have been made where appropriate. I am confident insurers will be closely engaged with both the regulator and policyholders in the weeks ahead and I am also pleased to see the FCA make some free legal advice available to policyholders.

Despite the difficulties that have led to this decision, I also want to stress that business interruption insurance remains a crucial product for many SMEs. A wide variety of risks that would otherwise threaten the survival of a business, including fire and flood, are protected by it. The Association of British Insurers (ABI) reported in April that UK insurers expect to pay out £900m in business interruption claims in response to the COVID crisis, as part of the £1.7 billion that the sector is paying out for COVID-related claims across business interruption, travel and event cancellation insurance.

As we look toward building back better, there are of course ways insurers, brokers and the government can mitigate controversy over misunderstandings related to insurance contracts:

A priority for the insurance market will be to establish more rigorous product governance processed, with clarity of product wordings and intent at the heart of this.

Improve advice and guidance process to ensure clients understand the insured and non-insured risks that they have.

Ultimately, this was an unprecedented evented and therefore both the market and government need to work together to find a long-term solution to pandemics and other systemic risks. This will allow for businesses to plan for the future, with the knowledge of a resilient public/private support system in place.

The IFSAPPG will continue to do its part in engaging with businesses, insurance representatives and the government to ensure a sustainable route forward is taken.

Authored by CII


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