Small businesses hoping for insurance payouts because of coronavirus disruption have suffered a blow after the uk financial regulator failed to reach a voluntary agreement with insurers over implementing a high court ruling.
Earlier this month, lawyers acting for the financial conduct authority had claimed victory in a test case to decide disputed payouts, with judges finding in favour of policyholders on the majority of the key issues.
But, on wednesday night, after negotiations over starting these payouts failed, the fca said it would have to seek further court rulings on friday.
News of the failed talks makes it more likely that the case will go to an appeal at the supreme court, meaning months more delay until the businesses receive any money.
We had hoped to reach an agreement with the insurers by today on the interpretation of some important elements of the judgment affecting which small businesses get paid and how much, the fca said. this would have allowed for faster payout for policyholders with eligible claims. however, we recognise that this case has always involved complex issues.
As a result, both the fca and insurers have now filed skeleton arguments with the court, setting out their differing interpretations of the original judgments. these interpretations will be ruled on by a judge at fridays hearing, with decisions expected on the same day.
At that point, the fca and insurers will have to decide either to accept the judges ruling on which policies have to pay out, and which do not or take an appeal on the rulings directly to the supreme court.
Wednesdays negotiations had involved the fca and seven out of the eight insurers in the test case. the other insurer, zurich, does not have to pay out under the original high court judgment.
A ninth insurer could yet try to intervene in the case. according to court documents, qic europe, which is part of qatar re, wants to appeal against the high courts decision on one of the policies sold by rsa if rsa itself decides not to do so.
Many insurers have sold policies with similar wordings, and the fca said before the case that 50 different insurers, including qic, could be affected by the high court judgment.
The fca has objected to qics plan to appeal.
If a supreme court appeal is sought by any of the parties, it is likely to take several months, preventing payouts on disputed policies. however, the fca noted that even if appeals were launched, it remained theoretically possible to resolve the outstanding issues in the coming weeks.