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Hiscox 'regrets' anguish caused to small businesses by insurance battle

Simon Foy
·2 min read
Closed pub
Closed pub

Insurer Hiscox said it regretted the anguish suffered by customers in a dispute over business interruption claims during the pandemic as it plunged to a $269m (£192m) pre-tax loss.

The FTSE 250 firm admitted that its reputation was damaged after it refused to pay out on most of its business interruption policies, arguing they were never intended to cover losses caused by a pandemic.

The firm was one of eight defendant insurers in a landmark legal action brought by the City regulator that went all the way to the Supreme Court.

Despite losing in the UK’s highest court, Hiscox said in January that expected that it would have to pay out on fewer than one third of its 34,000 business interruption policies in the UK.

Chief executive Bronek Masojada said: "Hiscox has undoubtedly suffered some brand damage this year... We clearly regret the uncertainty and anguish that the dispute has caused to our customers, so it is important that we learn from this experience.

"The most important lesson is the need for clarity in wordings, to ensure intent is properly reflected in the policy detail."

The firm is using staff from outside the UK as well as contractors to help it process claims more quickly, Mr Masojada said. He declined to predict how quickly the majority of claims would be settled and said that the speed of dealing with claims depended partly on information provided by customers.

Hiscox expects to pay $475m in event cancellation and business interruption claims caused by the pandemic, even after accounting for reinsurance deals that limit its maximum liability.

It will not pay a dividend for 2020 and its executives will not take cash bonuses until the payout is reinstated, it said. Shares tumbled as much as 13pc on Wednesday morning. The stock has lost about a fifth of its value since November.

Despite the turbulent year, the insurer reported gross written premiums of $4.03bn, in line with 2019. Without Covid-19, the firm said it would have reported a profit of $207m instead of a pre-tax loss of $269m.

Robert Childs, chairman of Hiscox, said: "Over my 48 years in the business, I have experienced most of the challenges that Mother Nature and mankind have thrown at the insurance industry, but Covid-19 and its repercussions have been one of the most testing."