FCA Could Take Business Interruption Case To Court By July

By Martin Croucher
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Law360, London (May 11, 2020, 2:37 PM BST) -- The Financial Conduct Authority could bring a case over insurers' liability over claims for business interruption to court as early as July, a group of claimants said on Monday, although it could come too late for businesses brought close to collapse by a continued coronavirus lockdown.

The Hiscox Action Group, made up of more than 200 businesses denied cover by insurer Hiscox under policies for interrupted business, said it met the FCA last week.

The regulator said at the start of the month it would go to the High Court with a sample of policy wordings that have triggered the greatest uncertainty over liability as it attempts to gain what it called an authoritative declaratory judgment.

"Our understanding is that it could be before the courts by July," Mark Killick, a founding member of the action group, told Law360, relaying what the group been told at the meeting with the regulator.

The FCA has written to insurers that are refusing to pay out on claims and expects a reply by May 15. Based on those replies, it will determine which cases to include in its court case.

Killick, an executive from public relations company Media Zoo, one of the businesses denied compensation by Hiscox, said that the court action could come too late for many businesses.

"For our members, this is an existential event for them," Killick added. "They need money, and sooner rather than later. I'm not sure that the FCA is moving at the speed that our members need."

A spokesman for the City watchdog declined to comment on the timing of its move, and referred to an earlier statement that it will bring the case "as soon as possible."

Killick said proposed group litigation launched by the Hiscox Action Group, instructed by Mishcon de Reya LLP, would not be held back to wait for the result of the FCA's case.

"We are going to move forward as quickly as we can," he added.

The 200 businesses in the Hiscox Action Group, combined with another 100 businesses under the Night Time Industries Association, represents a group litigation claim of around £50 million ($61.5 million).

Hiscox said last week that it would face a hit to its business of between £10 million and £250 million if it was found liable for business interruption policies.

Willis Towers Watson, a broker, said at the start of the month that domestic insurers could face a bill of between $1.1 billion and $13.9 billion for claims on insurance for business interruption and canceled events, depending on the severity of the pandemic.

--Editing by Ed Harris.

For a reprint of this article, please contact reprints@law360.com.

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