Business interruption insurance policies with pandemic or notifiable disease clauses should be read as to cover coronavirus and claims should be met, the High Court has heard.

The FCA (Financial Conduct Authority) brought the test case on behalf of policyholders.

Eight insurers were involved, including Hiscox, RSA and QBE, and 21 different “lead” policy wordings were examined in detail.

The FCA have said that up to 370,000 UK businesses could be affected by insurers’ failure to pay out on BI claims.

Christopher Woolard, Iiterim CEO of the FCA, said: “We brought the test case in order to resolve the lack of clarity and certainty that existed for many policyholders making business interruption claims and the wider market.

“We are pleased that the Court has substantially found in favour of the arguments we presented on the majority of the key issues.

“Today’s judgment is a significant step in resolving the uncertainty being faced by policyholders. We are grateful to the court for delivering the judgment quickly and the speed with which it was reached reflects well on all parties.”

Law firm Mishcon de Reya, which acted for the Hiscox Action Group, and the Hospitality Insurance Group Action, described the case as a “resounding victory for the policyholders”.

“Overall, this represents a positive outcome for most Hiscox policyholders who we represent. We will continue to press the claims of that group of 400 via the arbitration process that is underway vs Hiscox,” the firm said in a statement.

The Court will now hear the parties as to appropriate declarations to be made in light of its findings, with a hearing expected to take place in October.

The result is legally binding on the eight insurer defendants to the test case in respect of the policies considered.

It will also provide guidance for the interpretation of similar policy wordings and so directly impacts the resolution of many more claims underwritten by many more insurers who were not involved in the test case, and beyond those specific wordings considered in the test case.

Insurers have asked for more time to put in an application for permission to appeal, indicating that an attempt to appeal by them is likely.