Hiscox is digging its heals in over settling business interruption insurance claims for the Covid-19 outbreak despite – or perhaps because of – its admission it already anticipates paying out $175m (£142m) in coronavirus claims arising from restrictions on travel and mass gatherings.
A group of nearly 200 disgruntled customers – dubbed the Hiscox Action Group – is in advanced talks with legal firm Mischon de Reya to underwrite its legal action against specialist insurer.
The issue first emerged nearly ten days ago, when by Media Zoo – which had spent £13,425 on its Hiscox policy – wrote to Business Secretary Alok Sharma arguing that the firm is avoiding its obligations.
Media Zoo has now been joined by hundreds of others, including more than 100 pubs and nightclubs in its action.
Hiscox has claimed its business interruption insurance “was not designed to cover the extraordinary circumstances caused by this pandemic, simply too large and too systemic for private insurers to cover”.
Instead the insurance firm, which uses the advertising strapline “as good as our word”, said its exposure to the coronavirus is limited to event cancellations and abandonment due to the outbreak. It is also settling claims in media and entertainment and the travel sector.
However, it still faces a $150m bill if travel restrictions and social distancing measures remain in place for six months from March, rising by another $25m if coronavirus restrictions are extended.
In a trading update the company said: “Hiscox believes its business interruption exposure to Covid-19 is limited in Hiscox Europe and it has negligible exposure in Hiscox USA”. It added that capital and liquidity “remain robust” and that it is “operationally strong in the face of unprecedented global uncertainty”.
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