As the individual claims and class action complaints we are collecting pile up in the U.S. court system, attention in the UK has turned to a test case between the Financial Conduct Authority (“FCA”) and eight large insurance companies. The FCA is an independent financial regulatory body responsible for protecting consumers and financial markets, as well as promoting competition.
In mid-March, the FCA sent letters to insurance companies outlining expectations for handling COVID-related business interruption claims, followed in mid-April with a letter to insurance company CEOs. On May 1st, the FCA announced its intention to bring a test case in the High Court in London. The FCA collected and analyzed information from insurance companies about their business interruption policies and wordings, as well as their intentions and decisions to approve or deny related claims. From those submissions, the FCA identified a representative sample of policy wordings and solicited arguments from policyholders about why particular wordings should provide coverage. The FCA then compiled and released a list of 17 commonly used policy wordings from policies issued by 8 leading insurers that, in the FCA’s view, encompassed a majority of the key disputed issues. The FCA also released a proposed set of assumed facts, proposed questions for determination, and a proposed issues matrix.
Proceedings in the High Court officially began on June 10th when the FCA filed its Claim Form and Particulars of Claim, which serve as its pleading. The first case management conference took place on June 16th, at which the Justice ordered that the case be expedited. Insurers are expected to file defenses on June 23rd, with a second case management conference set on the 26th to resolve any outstanding procedural matters before trial. Replies and skeleton arguments are scheduled for the first half of July, followed by an 8-day court hearing on July 20-23 and 27-30.
As of now, the closest parallel to the FCA test case in the U.S. are the competing MDL aggregation applications in Philadelphia and Chicago. While the procedure is completely different, the benefits of case aggregation through the MDL process overlap with the benefits of the UK test case (i.e., efficiency, timeliness, lower litigation costs). It will be interesting to see if either MDL application gets approved and if so, which will prevail. A subsequent blog post will compare and contrast the UK test case procedure with the MDL procedure in the U.S.