Hiscox press release: COVID-19 business interruption
Posted 15/04/2020 – Insights
Following much media speculation in recent days, Hiscox has released the following press statement on the London Stock Exchange:
Hiscox Ltd market update regarding business interruption exposure
Hamilton, Bermuda (15 April 2020) – Hiscox’s core policy wordings do not provide cover for business interruption as a result of the general measures taken by the UK government in response to a pandemic. In determining any response to claims or complaints Hiscox reviews every case individually. In light of recent market speculation, Hiscox sets out below some additional details on its business interruption exposure.
Hiscox UK provides business interruption cover to SMEs as part of its small commercial package policies. Approximately 10% of Hiscox UK’s small commercial package customers purchase cover for business interruption. Of those who do purchase cover for business interruption, Hiscox estimates approximately 10,000 have been directly impacted by mandated government closure to stop the spread of COVID-19. Over 70% of these customers have monthly revenues of less than £40,000 in a normal trading environment, with a significant proportion below £10,000 per month. The level of economic loss experienced by these businesses is likely to be materially lower than revenues in a normal trading environment.
Hiscox believes its business interruption exposure to COVID-19 is limited in Europe and it has negligible exposure in its US retail business.
Hiscox Retail has substantial reinsurance cover in place.
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.
Hiscox will provide a further update to the market clarifying its potential exposures within the next week, upon completion of on-going business analysis and assessment.