The reality is that only a small minority of the headline figure of 370,000 businesses will actually receive a claims payment as a direct result of the judgement.

The initial FCA action focused on a small sub-set of wordings, and thereby immediately excluded a large number of businesses which may have had valid claims under other heads of cover, or via extensions. This was then compounded when the FCA chose to appeal a sub-set of findings from the initial High Court case. While the Supreme Court has found overwhelmingly in its favour in these appeals, it will be something of a pyrrhic victory for the vast majority of claimants who were not included in the action or whose policies include slightly different extensions.

Crucially, while the Supreme Court has determined that the imposition of lockdown did act as a valid trigger for businesses to be compelled to close, it did not determine precisely what ‘lockdown' meant in practice. This means that insurers will still be able to dispute the grounds on which a business ceased trading and therefore, whether its business was interrupted by external factors beyond management control.

Further, although this case has been settled quickly by English legal standards, it would have been sensible if the FCA had taken more creative steps such as setting up a fund from the outset. In practice, the decision today will only affect payments for the first lockdown back in March of last year. Since many policies will have restrictive sub-limits and work on an aggregate basis, they will yield relatively small payments - that will come far too late for many struggling firms.

Mactavish's CEO, Bruce Hepburn said: "As ever, the biggest victors here are the lawyers. Having limited itself to a small set of claims, and then having appealed on grounds that affected an even smaller number, the FCA has essentially failed in its mission to drive a quicker resolution for as large a number of firms as possible.

"The situation is akin to one in which the FCA has set out to rescue stranded passengers from a sinking ship. In a situation like that, we wouldn't be celebrating, we'd be mourning the fact that most of them were still on board when it went down."

Mactavish believes that firms which purchased policies similar to those affected by this judgment, but with insurers or on wordings which were not directly part of the test case, may also have missed their chance to notify insurers because their brokers had previously told them that their claims were not valid. The company says that it has been approached by policyholders who have experienced precisely this scenario.  

"After all of this effort and expense, the primary impact of this action on most policyholders will be increased premiums and much more restrictive wordings as insurers look to recoup losses and ensure that they limit their exposures in future, coming on top of the worst insurance ‘hard market' in a generation - and such a severe recession."

Mactavish points out that the limited scope of the FCA's action should not determine policyholders' attitude to their own claims. "Just because the FCA hasn't seen fit to solve this problem doesn't mean that the usual routes to claims payment should be abandoned. We've been able to help firms which had previously been told that they had no valid claims. The point is simply that policyholders should now take their fate into their own hands and work with specialists to achieve a resolution to their own specific case."