Lloyd’s of London insurer Hiscox has been hit by a loss following a $475m pay out for cancelled events, business interruption policies and other claims related to the coronavirus pandemic.
The company, which insures anything from oil rigs to paintings, classic cars and businesses, struck an apologetic tone after disagreements last year with a number of firms over whether their business interruption cover should pay out for the pandemic, since such policies are a key part of commercial insurance cover that pay out if a firm cannot conduct its usual trade due unexpected events.
Hiscox said it had begun paying claims, and hired more claims handlers to speed up the process, with about one in three of its 34,000 UK business interruption polices paying out. Hiscox chief executive Bronek Masojada said, “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 Covid-19 losses pushed Hiscox into a pre-tax loss of $268.5m (£192m) for 2020, compared with a profit of $53.1m the year before. Without the pandemic, it would have generated a profit of $207m, Hiscox said. Most of the pandemic-related losses were for event cancellations, where Hiscox sold communicable disease cover, and most of those claims have been paid. The second-largest share for Covid-19 claims is from UK business interruption cover.
“2020 got off to a good start and then came the global pandemic. 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,” said Robert Childs, Hiscox’s chairman.
