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Business Interruption Insurance ruling - expert reaction

Rob Benson, Head of Insurance, Grant Thornton UK LLP, comments on the Supreme Court judgement regarding business interruption insurance during the coronavirus crisis:

“Although this judgment imposes an increased financial burden on some insurers, the certainty that arises from the conclusion of the appeals process allows both firms and their customers to begin making firm plans to move forwards. The FCA has already issued guidance requiring insurers to make preparations to pay customers promptly following the conclusion of the appeals process, and it is vital that all valid claims are now settled as soon as possible in order to avoid causing any further damage to the industry’s reputation. The fact that the judicial system has had to be further employed before these insurers have paid out will reinforce many stakeholders’ worst pre-existing opinions about the insurance industry. Brokers have already been reconsidering which insurers to place business interruption cover with in light of the pandemic, and today’s judgment will further inform these decisions.

“The Supreme Court’s ruling that the Orient Express case was wrongly decided removes one of the most significant precedents relating to business interruption, causation tests and liability. All insurers will therefore need to review a huge volume of policy wordings in order to assess the resulting impact on their potential liabilities, and consider how best to respond to this.”