UK COVID-19 Business Interruption Litigation — A 3 Minute Explainer

The UK Financial Conduct Authority (FCA) is currently litigating a test case against 8 UK business interruption insurers. Because the FCA has taken the position COVID-19 does not cause property damage, the only policies at issue provide so-called “non-property damage” business interruption coverage.

In this video, we explore how the EU (under Solvency II) and the UK allow authorization of property and casualty insurers to write “miscellaneous financial loss” insurance including non-property damage business interruption. In contrast, US insurance, accounting and tax rules generally require property insurance coverages to include a property damage trigger.

Despite regulatory incompatibility, policymakers and advocates in the US have proposed pandemic “insurance” products following the European model.