Current status of COVID business-interruption (BI) claims in the UK — and how forensic accountants can help
Short summary: The FCA’s 2021 test case set the legal foundation for many COVID BI claims, insurers have paid and settled large numbers but significant contested claims and appeals remain (including issues now before the Supreme Court). Many pandemic-era BI claims are approaching limitation deadlines (a practical urgency). Forensic accountants remain central to proving, quantifying and prosecuting BI losses — and their role keeps growing as litigation and complex adjustments continue. Financial Conduct Authority
1) What happened (brief legal background)
In January 2021, the UK Supreme Court handed down its landmark decision in the FCA test case (FCA v Arch & others), significantly clarifying how many common non-damage business interruption (BI) wordings should be interpreted in the context of COVID-19 restrictions. As a result, the judgment opened the door to many successful claims for SMEs and other policyholders. Furthermore, it remains the legal baseline for much of the market and continues to influence how insurers assess similar cases today.
Since then insurers have paid and continue to finalise many claims. However, new (and older) points of law and factual disputes—such as how “disease-at-the-premises” clauses apply, aggregation/causation questions, and whether certain employer costs like furlough should be deducted—have produced further litigation and appeals. Recent litigation examples show the topic is still evolving and could affect the size of outstanding liabilities. Reuters
2) Current legal / market status — what to watch (September 2025)
- Test-case principles still apply, but application to particular policy wordings and factual matrices varies by case and insurer. Supreme Court
- Ongoing appeals and fresh litigation.
Some high-value disputes continue to reach higher courts (notably a recent permission to appeal in Bath Racecourse v Liberty Mutual about whether furlough payments must be deducted from BI payouts). That single issue could materially affect many outstanding claims. 3VB - Regional court wins and precedents.
Examples such as the ExCeL Centre appeal show that court outcomes can extend cover in ways claimants may not have expected — increasing opportunities for successful claims. Reuters - Regulatory / complaints handling.
The Financial Ombudsman and FCA continue to provide guidance and handle disputes. Moreover, firms and policyholders are expected to follow fair complaint processes. Financial Ombudsman - Practical urgency — limitation and time limits. Firms and advisers are warning that many pandemic BI claims may become time-barred soon; litigation firms and insurers have repeatedly flagged March 2026 as an important limitation horizon for many claims, which means claimants and their advisers should not delay. stewartslaw.com
3) Why forensic accountants are central (roles & value)
Forensic accountants bring a mix of technical accounting, commercial judgement, and forensic evidence-gathering skills that are often decisive in BI claims:
- Quantum of loss (core):
Build robust, transparent calculations of insured losses. In addition, assess lost turnover, increased costs, gross profit/gross margin analysis, and determine the correct measure under the policy wording—such as loss of profit versus loss of gross profit. - Causation & counterfactual modelling:
Isolate the loss caused by insured events (e.g., government restrictions, local outbreaks) from other business disturbances (trends, seasonal dips, management decisions). Produce “but-for” scenarios and sensitivity analyses. - Contemporaneous evidence collection:
Retrieve, preserve and interpret till/EPOS records, bank statements, management accounts, booking records, supplier invoices, emails, and operational logs — crucial if insurers contest the claim’s factual basis. - Adjustments (grants, furlough, taxes):
Identify and quantify relevant offsets — government grants, furlough payments, business rate relief, insurance recoveries — and advise on which are deductible per the policy or legal guidance. (Recent litigation over furlough deductions makes this point especially important.) 3VB - Expert reporting & witness work:
Prepare expert reports compliant with CPR/PCR/Family Procedure Rules (where applicable), and provide clear expert evidence in court or arbitration. - Negotiation and settlement support:
Produce settlement schedules and, in addition, explain methodologies to insurers while modelling settlement scenarios. This helps legal teams and clients negotiate better outcomes with greater confidence.
To be continued.
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