The City watchdog has filed an appeal allowing it to take its case on coronavirus-related business insurance claims straight to the Supreme Court if needed, in a bid to get clarity “at speed” for affected firms.
The Financial Conduct Authority (FCA) said it had filed a so-called “leapfrog” application as a precaution against insurers not agreeing by Wednesday to pay out on business interruption claims made during the pandemic.
The regulator said it is working “closely and at speed” with the eight insurers and two intervenors involved in the test case, as it looks to avoid an appeal, so that payouts can be made on eligible claims swiftly.
It said that seven of the insurers have also made similar appeal applications, should agreement not be reached by the end of Wednesday.
A landmark High Court ruling earlier this month determined that the “disease clauses” in most, but not all, of the policies in the test case provide cover to policyholders.
The FCA had brought the test case, which could affect about 370,000 businesses, over the wording of business interruption insurance policies, which some insurers argued did not cover the Covid-19 pandemic.
The FCA previously said it launched the legal action following concerns over the “lack of clarity and certainty” for businesses seeking to cover substantial losses incurred by the pandemic and subsequent national lockdown.
According to the regulator, the value of policies likely to be affected by the test case is approximately £1.2 billion.
The ruling was welcomed by the FCA, as well as the Hiscox Action Group, which has more than 400 members and intervened in the High Court case.
The FCA said it is now looking to reach agreement “on a range of issues”, with the insurers involved to allow payouts to be made, adding that “positive discussions continue with all parties”.
It said “the FCA’s intention has, throughout the process, been to achieve clarity on affected BI (business interruption) policies at speed.
“The FCA believes that clarity was provided in the initial judgment handed down on 15 September.”
Insurer Hiscox said separately it had also applied for a leapfrog certificate, but had not decided whether or not to seek to appeal.
Hiscox added it “remains committed to an expedited resolution and today’s application, pending this hearing, preserves speed of process for all parties should there be an appeal”.
RSA Insurance has also sought permission to appeal against the court’s findings.
A court hearing on these applications will take place on October 2.
Hiscox and RSA have said they could face about £200 million in claims following the High Court judgment.
Shares in Hiscox and RSA were both trading 2% lower on Tuesday.