Hiscox faces up to £142m payouts over coronavirus claims

Insurance giant Hiscox said it expects to pay up to 175 million US dollars (£142 million) to settle claims due to restrictions on travel, events and mass gatherings due to the coronavirus pandemic.

The specialist insurer said it is settling claims and will face a 150 million dollar (£121.7 million) bill if travel restrictions and social distancing are in place for six months from March.

However, the company said its “core small commercial package policies” do not provide cover for business interruption caused by the Government’s coronavirus response.

The firm said its exposure to the virus is limited to event cancellations.

Hiscox said a number of UK policyholders have disputed the application of their policies related to business interruption.

It said: “Hiscox recognises these are extremely difficult times for businesses and is determined to help provide greater certainty for customers.

“As a priority it will therefore work with the UK insurance industry, its regulators and its customers to seek means of expediting resolution through the range of independent mechanisms available.”

The insurer has faced challenges from business owners including celebrity chef Raymond Blanc, who said he had enlisted lawyers after Hiscox denied his restaurant business a payout for virus-related losses.

Last week, the Financial Conduct Authority (FCA) told insurance bosses that firms must pay out “as soon as is possible” to help small businesses survive the lockdown.

Hiscox said it believes its business interruption exposure to the pandemic is limited in its European business, with only “negligible” exposure in its US arm.

Shares in the company moved 2.8% higher to 820.2p in early trading on Wednesday.