Hiscox’s core policy wordings do not provide cover for business interruption as a result of the general lockdown measures taken by the UK government in response to the coronavirus pandemic, said the company in a market update about its business interruption exposure.
Hiscox has come under fire for its exclusion of the new coronavirus in business interruption policies. The UK’s regulator, the Financial Conduct Authority, this week affirmed that most insurance policies bought by smaller UK companies do not cover disruption caused by the pandemic, but urged insurers to pay quickly if the coronavirus pandemic is covered.
In a March 15 market update, intended to allay market speculation about the insurer’s potential business interruption claims from the COVID-19 crisis, Hiscox said it has limited BI exposure in Europe and negligible exposure in its U.S. retail business.
Hiscox 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, and its Hiscox Retail unit has “substantial reinsurance cover in place.”
The company went on to say that it is “proactively paying claims for these lines of business and the claims are progressing in line with its expectations.”
Additional details on its business interruption exposure follow:
- 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.
- More than 70% of these customers have monthly revenues of less than £40,000 (US$50,168) in a normal trading environment, with a significant proportion below £10,000 (US$12,542) 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 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.
- Despite Insurance Industry Concerns, More States Introduce COVID-19 BI Bills
- Many Insurance Policies Bought by Small UK Firms Don’t Cover Pandemic: Regulator
- Suddenly There Is Big Demand for Pandemic Cover, Says Underwriter
- Trump Tells Insurers to Pay Virus Claims If Pandemics Not Excluded
- Litigation Builds Against Insurers Over Coronavirus Business Interruption
- Hiscox Withdraws 2020 Financial Guidance, Cancels Dividend Payment on COVID Crisis
- Canadian Insurers Hit with Lawsuit on Refusal to Pay COVID-19 Biz Income Claims
Was this article valuable?
Here are more articles you may enjoy.