Following the ruling from the High Court on the FCA business interruption test case, Lloyd’s and LIIBA explain their stances 

Lloyd’s of London has welcomed the FCA business interruption test case ruling as it will “bring coverage clarity for many policyholders with certain non-damage business interruption cover extensions”.

This is according to a statement released by Lloyd’s.

It said: “We will now take the time to carefully consider and respond to the implications of this complex judgment for our customers as well as its impact on the Lloyd’s market, which retains less than 2% of the overall UK property SME market. Our extremely strong capital position ensures that we are well prepared to respond to the financial implications of the High Court’s judgment and, importantly, to support our impacted customers.”

Last week Lloyd’s revealed in its first half results for 2020 that it expects to pay out £5bn in Covid-19 claims to customers worldwide, but that it is also “well capitalised”.

Support package

The statement continued: The corporation has also committed a £15m package of support for charitable organisations responding to the pandemic, together with £15m in seed capital investment to develop a Systemic Risk Centre of Excellence, which aims to better understand, model and provide insurance for systemic catastrophic events.

“We are also progressing at pace a number of solutions to support insurance industry and government partnerships to fast-track societal and economic recovery and build resilience to future systemic and black swan catastrophic events.”


Meanwhile, Christopher Croft, chief executive of the London and International Insurance Brokers Association (LIIBA), added: “Clients deserve clarity and the fact that this case had to take place at all is a rebuke to our industry and the often obscure language we use. Customers deserve to understand exactly what it is they are getting in language they recognise.

“The swift action taken by the FCA to bring clarity after the fact is to be commended. Many other countries are looking on with interest as their BI cases grind slowly through their legal systems.

“The fact that the Court found in favour of the policyholders hopefully brings this action to a close. The industry’s reputation has been damaged by the debate over exactly what is or is not insured and we need to think hard about how we redress that and introduce absolute clarity into the product our customers buy.”

Croft said this will include challenging the principles at the heart of these cases, ”principles which insurers have held dear but which we have seen make no sense to the general public”.