Hiscox warns of $175m COVID-19 hit; agrees to prioritise resolution of UK BI disputes
Specialist global insurer Hiscox is expecting to pay net claims of up to $150 million arising from the disruption caused by restrictions on travel and mass gatherings due to the COVID-19 pandemic.
The company said that these claims could increase by an additional $25 million if these restrictions are extended beyond six months.
Following its response to the "market speculations" over non-payment of business interruption insurance claims, the company admitted that a number of UK policyholders have disputed the application of their BI policy, and agreed to expedite resolution in collaboration with the industry and regulators.
"Hiscox recognises these are extremely difficult times for businesses and is determined to help provide greater certainty for customers," the company said in a statement. "As a priority it will therefore work with the UK insurance industry, its regulators and its customers to seek means of expediting resolution through the range of independent mechanisms available."
Hiscox noted that it is "actively settling claims" for event cancellation and abandonment, media and entertainment and other segments including travel. Additionally, the insurer is receiving claims as a result of economic losses following government action to stop the spread of COVID-19.
The company highlighted that its capital, liquidity and funding positions remain "robust" and the group remains "operationally strong" in the face of unprecedented global uncertainty presented by the COVID-19 pandemic. Hiscox expects this uncertainty and consequent capital contraction to influence rates across wholesale and reinsurance markets.
Earlier last week, the company issued a statement in response to the "market speculations", saying that its core policy wordings do not provide cover for BI in the UK.
The carrier claimed that only 10,000 of UK SMEs have been directly impacted by mandated government closure. It said, "over 70 percent 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 is likely to be materially lower than reported revenues."
Hiscox believes that its business interruption exposure to COVID-19 is "limited" in Europe and "negligible" in its US retail business. It said, both Hiscox UK and Hiscox Europe have a substantial catastrophe reinsurance programme.
