Shares in UK insurance firms remained resilient this afternoon, even as the High Court ruled some firms will have to pay out on the disputed business interruption policies.
Insurers may have to pay out to hundreds of thousands of British firms who had business interruption claims turned down during the pandemic.
The Court ruled on a representative sample of 17 policy wordings by 16 insurers. It found that most, although not all, of the clauses provide cover.
Investors shook off the ruling with Standard Life Aberdeen gaining 0.82 per cent in this afternoon’s session. Legal and General and Aviva were up 1.53 per cent and 1.42 per cent respectively.
Major insurance group RSA dropped three per cent after the ruling before trading up 6.6 per cent by 2.15pm.
Hiscox soared nearly 15 per cent after it said it had reduced its payout estimate for business interruption claims to “less than £100m” following the ruling.
The insurance giant has come under pressure from the Hiscox Action Group, which was given permission to intervene on behalf of Hiscox policyholders during the test case.
The action group hailed the case as a “landmark victory”, with its lawyers writing to the insurer for interim payments to be made to policyholders.
The director-general of the Association of British Insurers, Huw Evans, welcomed the ruling but emphasised the judgment “divides evenly between insurers and policyholders on the main issues”.
“Individual insurers will be analysing the judgment, engaging with the regulator, taking account of the appeal process and keeping their customers informed in the period ahead”, he added.
The insurers have to right to fast-track an appeal on the judgment straight to the Supreme Court.