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The FCA test case: causal expressions in the insurance context

Online Published Date : 24 February 2021 | Appeared in issue: Vol 21 No 01 - 24 February 2021

Given the contractual uncertainty around the validity of claims for losses under business interruption insurance policies due to the outbreak of Covid-19 and the government measures, the Financial Conduct Authority (FCA) sought court declarations as part of a test case. The test case is not intended to cover all possible disputes or any single claim, but to resolve some key uncertainties regarding contractual coverage and issues of causation. Not to provide a thorough analysis of the judgments, the following focuses on the issues of interpretation of causal phrases used in insurance contracts and divergent causal nexus recognised in insurance law.

The FCA test case: true cause of business interruption following the Covid-19 outbreak

Online Published Date : 24 February 2021 | Appeared in issue: Vol 21 No 01 - 24 February 2021

The Supreme Court’s judgment on The Financial Conduct Authority v Arch Insurance (UK) Ltd [2021] UKSC 1; [2021] Lloyd’s Rep IR 63 (the “FCA test case”) was handed down on 15 January 2021. The case was brought by the UK FCA to seek clarity for the benefit of small businesses and enterprises on the meaning of 21 selected policy wordings issued by eight different leading business interruption (“BI”) insurance providers.