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RSA Responds To FCA's Business Interruption Court Proceedings

RSA Insurance Group Plc. (RSA.L) Monday issued a statement regarding FCA's update on court proceedings in relation to business interruption insurance.

Through the proceedings, which was announced on May 1, the FCA intends to obtain court judgements, using the Financial Markets Test Case Scheme, on contractual interpretation of certain business interruption insurance policies in the UK market. This would bring clarity for both customers and the industry.

The FCA confirmed now that they have selected a representative sample of 17 policy wordings to include within the court case as well as publishing a list of 16 insurers who underwrite these wordings.

The FCA has invited a subset of 8 insurers to assist with the court case, with RSA's participation being in relation to 3 of the schemes referenced.

The FCA expects the outcome of the court proceedings and related rulings to be directly relevant for all insurers providing business interruption insurance in the UK.

RSA, in its May 7 update on the impacts of COVID-19, had noted that at the end of April it received valid claims across travel, wedding cancellation (UK only) and commercial lines business interruption and related policies with an estimated cost of about 25 million pounds net of reinsurance. This estimated cost has not changed materially since then.

RSA said in its statement, "The FCA has made clear in their statement that in selecting policy wordings and insurers for the court case they have sought breadth of coverage across the key arguable issues, whilst minimising the number of parties engaged before the court. Market share has not been a determining factor in selection, and RSA's inclusion is not representative of its market share on the relevant policy wordings."

According to FCA, majority of business interruption claims are not expected to be eligible under their coverage terms for COVID-19, and the court proceedings seek to address the legal interpretation of just a small minority of policies and schemes.

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