Update from Hiscox on business interruption coverage
A group of businesses led by PR firm Media Zoo, allege that Hiscox is trying to avoid paying out for what they believe are legitimate business insurance (“BI”) claims related to business closures as a result of the pandemic COVID-19.
There has been considerable press coverage in recent days about this story including on the BBC and an action group website page has been created online.
Today Hiscox Ltd issued a news release to the stock market, as follows:
“Hiscox's core policy wordings do not provide cover for business interruption as a result of the general measures taken by the UK government in response to a pandemic. In determining any response to claims or complaints Hiscox reviews every case individually. In light of recent market speculation, Hiscox sets out below some additional details on its business interruption exposure.
Hiscox UK provides business interruption cover to SMEs as part of its small commercial package policies. Approximately 10% of Hiscox UK's small commercial package customers purchase cover for business interruption. Of those who do purchase cover for business interruption, Hiscox estimates approximately 10,000 have been directly impacted by mandated government closure to stop the spread of COVID-19. Over 70% of these customers have monthly revenues of less than £40,000 in a normal trading environment, with a significant proportion below £10,000 per month. The level of economic loss experienced by these businesses is likely to be materially lower than revenues in a normal trading environment.
Hiscox believes its business interruption exposure to COVID-19 is limited in Europe and it has negligible exposure in its US retail business.
Hiscox Retail has substantial reinsurance cover in place.
Hiscox publishes a realistic disaster scenario which estimates a net loss of $175 million for losses emanating primarily from event cancellation, entertainment and travel in a global pandemic scenario. Hiscox is proactively paying claims for these lines of business and the claims are progressing in line with its expectations.
Hiscox will provide a further update to the market clarifying its potential exposures within the next week, upon completion of on-going business analysis and assessment.”
Hiscox UK’s policies are not underwritten by its managed Syndicate 33.
Hiscox’s website gives further information about its business insurance policies as follows:
“If you are a Hiscox business insurance customer, you will no doubt have questions regarding your cover in relation to the impact of Coronavirus on your business.
At Hiscox we pride ourselves on our claims service and we will do everything we can to respond when a policy is triggered.
However, the core Business Interruption cover provided by our business insurance policies responds to physical property damage at the insured premises resulting in the business being unable to trade. Hiscox’s policies do not include diseases linked to pandemics such as Coronavirus due to the difficulty of insurers being able to quantify the potential risk.”
Hiscox’s share price has been affected by this news coverage and currently stands at 729p having been 1,028p on April 9th.