Hiscox breaks silence on 'market speculations' over UK COVID-19 business interruption claims

Specialist global insurer Hiscox said Wednesday that its core policy wordings do not provide cover for business interruption (BI) caused due to the UK government mandated lockdown measures meant to control the spread of COVID-19 virus.

The Bermuda-based company issued a statement saying that the details on its business interruption policy and exposure are in response to the "recent market speculations".

It said, in determining any response to claims or complaints the company will review every case individually. Hiscox UK provides business interruption cover to SMEs as part of its small commercial package policies.

The carrier claims that only 10,000 of UK SMEs have been directly impacted by mandated government closure. It said, "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 that its business interruption exposure to COVID-19 is "limited" in Europe and "negligible" in its US retail business.

The company noted that its "realistic disaster scenario" estimates a net loss of $175 million for losses emanating primarily from event cancellation, entertainment and travel in a global pandemic scenario.

Hiscox insisted that it is "proactively paying claims for these lines of business and the claims are progressing in line with its expectations".

The company said it 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.

Earlier this month, Hiscox said it has taken several actions in light of the "extraordinary challenges" presented by COVID-19 pandemic, including the withdrawal of its 2020 financial guidance and suspension of dividend payment and buybacks.