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UK lockdown not covered by Hiscox business interruption policy
15th Apr 2020 14:56
(Sharecast News) - Insurer Hiscox said on Wednesday that its core policy wordings do not provide cover for business interruption due to measures taken by the UK government in response to a pandemic, and that its realistic disaster scenario estimates a net loss of $175m, mainly from event cancellation.
Responding to press reports earlier in the week suggesting that some businesses were preparing a class action against Hiscox for rejecting their business interruption claims, the company said: "In determining any response to claims or complaints Hiscox reviews every case individually."
To clarify, Hiscox UK provides business interruption cover to SMEs as part of its small commercial package policies, it said, adding that about 10% of its small commercial package customers purchase cover for business interruption.
Of those who purchase business interruption cover, Hiscox estimated that around 10,000 have been directly impacted by mandated government closure to slow the spread of Covid-19. More than 70% of these customers have monthly revenues of less than ?40,000 in a normal trading environment, with a significant proportion below ?10,000 a month.
"The level of economic loss experienced by these businesses is likely to be materially lower than revenues in a normal trading environment," Hiscox said.
It believes that its business interruption exposure to the coronavirus pandemic is "limited" in Europe, while exposure in its US retail business is "negligible". Hiscox Retail has substantial reinsurance cover in place, it said.
"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."
Responding to press reports earlier in the week suggesting that some businesses were preparing a class action against Hiscox for rejecting their business interruption claims, the company said: "In determining any response to claims or complaints Hiscox reviews every case individually."
To clarify, Hiscox UK provides business interruption cover to SMEs as part of its small commercial package policies, it said, adding that about 10% of its small commercial package customers purchase cover for business interruption.
Of those who purchase business interruption cover, Hiscox estimated that around 10,000 have been directly impacted by mandated government closure to slow the spread of Covid-19. More than 70% of these customers have monthly revenues of less than ?40,000 in a normal trading environment, with a significant proportion below ?10,000 a month.
"The level of economic loss experienced by these businesses is likely to be materially lower than revenues in a normal trading environment," Hiscox said.
It believes that its business interruption exposure to the coronavirus pandemic is "limited" in Europe, while exposure in its US retail business is "negligible". Hiscox Retail has substantial reinsurance cover in place, it said.
"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."