Specialist global insurer Hiscox has reached a settlement with members of the Hiscox Action Group (HAG) over business interruption (BI) losses suffered due to government lockdowns following the outbreak of COVID-19.
Terms of the settlement remain confidential, but HAG had originally been targeting a £40 million payout from Hiscox, after contracting law firm Mishcon de Reya to represent it.
The settlement specifically relates to BI losses incurred between March and July 2020, and does not include cases that were resolved by the verdict of the Financial Conduct Authority’s (FCA) legal test case.
Following the January conclusion of this test case, Hiscox estimated that its 2020 COVID costs would increase by around $48 million.
But the insurer has been among the slowest to meet its claims obligation in the months since, having made final payouts on just 537, or 5.3%, of its more than 10,000 pending or approved claims as at May 31st, according to the latest FCA data.
Interim payments were similarly low at 1,469, or 14.6%, for Hiscox, who lagged far behind the average payout rate for insurers involved in the case. On average, 54% of the total 37,702 BI policyholders that had claims accepted had received at least an interim payment by UK insurers, based on June figures.
Along with seven other insurers, Hiscox participated in the industry test case, commenced by the FCA to gain certainty on specific issues of law of general importance to the handling of BI claims arising out of the COVID-19 pandemic.
The HAG also participated in the Test Case which was determined in a judgment of the Supreme Court in January 2021.
Hiscox and HAG confirmed that their settlement is in line with the Supreme Court Judgment and added that “the proceedings have now been resolved to the mutual satisfaction of all parties.”