Following the Court of Appeal’s decision in February 2025 that insurers were entitled to deduct the value of furlough payments from Covid-19 business interruption payments to insurance policyholders, the Supreme Court today granted the test case claimant policyholders permission to appeal this judgment.

In the lead matter of Bath Racecourse Company Limited and others v Liberty Mutual Insurance Europe SE and others, the policyholders – represented by partners Aaron Le Marquer and James Breese of Stewarts – argued that the intention of the UK government’s furlough scheme was to support businesses and save jobs, not to subsidise insurers. Policyholders argued that insurers received a ‘windfall’ from taxpayer funds by claiming the benefit of the furlough payments.

This issue is estimated to be worth billions to insurance policyholders. The Supreme Court has now determined that it raises an arguable point of law of general public importance, that ought to be considered by the Supreme Court at this time.

Aaron Le Marquer comments: “It is right that a question as consequential as this will be heard by the Supreme Court. Insurers have held significant funds back from policyholders on the basis that furlough payments can be deducted from indemnities – funds which would represent a lifeline for businesses struggling in the aftermath of the Covid-19 lockdowns and amidst enduring economic challenges. Some of these businesses have sadly already succumbed to insolvency, and the Supreme Court’s decision in 2026 will be of great interest to insolvency practitioners as well as the thousands of insured businesses affected.”

James Breese comments: “This is an important milestone and it is encouraging that the Supreme Court wishes to hear the appeal. The furlough scheme is said to have cost the Treasury in the region of £70bn. It is disappointing that a material amount of that sum is currently directly benefitting insurers’ balance sheets in the context of business interruption claims rather than the policyholders that the furlough scheme was designed to support. We look forward to the Supreme Court’s view.”

For more information, see our earlier article on the Court of Appeal judgment.

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