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Law360, London (June 8, 2020, 4:21 PM BST ) The Association of British Insurers said on Monday that its members will "abide by" the ruling of a High Court test case on business interruption cover brought by the Financial Conduct Authority.
Alastair Ross, regional head of public policy at the association, told the economic committee of the Northern Ireland Assembly that the trade body supports the FCA's action. The committee was also told that there is anger among business owners toward insurers.
The City regulator will take a sample of representative policy wordings to the High Court in London next month. It is seeking to determine how insurers are liable in most circumstances in which there is a dispute over a claim made by a business that has been forced to shut its doors.
Small businesses reeling from loss of earnings during the pandemic lockdown say they are entitled to compensation under business interruption policies in which there are extensions to cover closures brought about by an outbreak of infectious disease.
Insurers however say that those policies were never intended to cover losses from pandemics.
"The vast majority of policies won't cover a pandemic situation, and insurers aren't going to be able to pay out," Ross told the committee. "We'll see what the FCA action brings in terms of a decision by the court, and insurers will abide by that."
The FCA has said the findings of the court will be "legally binding" on the eight insurers involved in the case.
Ross appeared before the assembly committee amid mounting political concern over the response of insurers to the pandemic.
John Stewart, member of the legislative assembly for the Ulster Unionist Party, said in a question-and-answer session at the end of the hearing that there is a great deal of anger among business owners. Many felt "shafted" by insurers, Stewart told the committee.
But Ross said that insurers supported the FCA's legal action. "We support any process that will provide clarity and certainty for the minority of customers who are disputing whether they should be covered," he added.
A meeting between policyholders and an FCA representative last week raised concerns that insurers would appeal the verdict of the court, leading to a protracted legal dispute that drags on for months.
A spokesperson for the ABI told Law360 that the question of whether to appeal would be made by the insurers involved in the case.
--Editing by Ed Harris.
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