As many readers will already know, the test case brought by the Financial Conduct Authority in the English High Court challenging the declinature of many COVID – 19 claims under Business Interruption Policies in England was largely successful. Many of the insurers appealed by way of a ‘leapfrog’ provision allowing them to appeal direct to the English Supreme Court without going through the Court of Appeal first.

The Supreme Court unanimously dismissed the insurers’ appeals (The Financial Conduct Authority v Arch Insurance (UK) Limited and others [2021] UKSC 1). This is the end of the road for the insurers. According to public reports, the insurers must now pay out claims totalling approximate £1.8 billion.  The decision can be found here.

The insurers’ declinatures all related to claims under extensions in English Business Interruption Policies. Most of these extensions differ from those commonly found in New Zealand Business Interruption Policies and so the decision is of little help in this regard.

However, while determining the correct interpretation of the English extensions, the Supreme Court had to determine a causation argument that arises in all Business Interruption Policies where multiple causes of an insured peril act in combination to bring a business interruption that might not otherwise arise.

The Supreme Court also had to address the correct application of the trend clause found in all Business Interruption Policies.

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