High Court rules on Ecclesiastical's coronavirus test case
By Rob Freeman | 15th September 2020
The High Court has ruled some business interruption policies should have seen payouts from insurers to cover losses caused by the coronavirus lockdown.
But the judgment stated losses arising from the pandemic are not covered by Ecclesiastical's business interruption policies.
The court ruling comes after a test case brought by the Financial Conduct Authority featuring eight insurance companies which included Gloucester-based Ecclesiastical.
They argued the policies were not meant to cover such unprecedented restrictions.
A statement on Ecclesiastical's website said: "We recognise that while the ruling supports the position we have taken throughout this period, the judgment will clearly be disappointing to a small minority of our customers who had a different view.
"We are very mindful that this is an unprecedented situation that has been tough for customers and wanted to take part in the legal proceedings so we could gain maximum clarity for all in the shortest amount of time."
The statement also read: "We agreed to participate in a test case with the FCA to provide clarity and certainty to customers because we believed this was the right thing to do and we previously wrote to individual customers who have already submitted a claim or complained about the lack of cover."
The decision, which is expected to affect around 370,000 largely small businesses, could be appealed.
FCA interim chief executive Christopher Woolard said: "Today's judgement is a significant step in resolving the uncertainty being faced by policyholders.
"Coronavirus is causing substantial loss and distress to businesses and many are under immense financial strain to stay afloat."
He said the ruling cleared the path to successful claims and cleared up which might not be successful.
An FCA statement said: "Although the judgement will bring welcome news for many policyholders, the judgement did not say that the eight defendant insurers are liable across all of the 21 different types of policy wording in the representative sample considered by the court.
"Each policy needs to be considered against the detailed judgement to work out what it means for that policy."
The Federation of Small Businesses described the ruling as a big step forward, if only limited.
National chairman Mike Cherry said: "It can only be celebrated as a partial victory as it still leaves many with little certainty around whether they will receive payouts for policies that have cost them thousands.
"The FCA was absolutely right to argue that disease or denial of access clauses within interruption policies should trigger pay-outs in the event of coronavirus-linked disruption.
"We echo the regulator's call to insurers to reflect on the clarity provided by this judgment and do the right thing by policyholders, many of which are fearing for their futures after six months of serious disruption.
"They acted responsibility by taking out these policies and having them honoured is crucial to encouraging more firms to do the right thing where insurance is concerned."
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