Hiscox warns of $175m coronavirus insurance hit
Insurer Hiscox has anticipated paying out up to $175m (£142m) in coronavirus insurance claims arising from restrictions on travel and mass gatherings.
The insurer faces a $150m bill if travel restrictions and social distancing measures remain in place for six months from March. And that insurance sum could rise by another $25m if coronavirus restrictions are extended.
However, Hiscox as said its “core small commercial package policies” do not cover business interruption as a result of the government’s pandemic response.
Instead the insurance firm said its exposure to coronavirus is limited to event cancellations and abandonment due to the outbreak. It is also settling claims in media and entertainment and the travel sector.
“Hiscox believes its business interruption exposure to Covid-19 is limited in Hiscox Europe and it has negligible exposure in Hiscox USA,” the company said.
The small business insurance company also said its capital and liquidity “remain robust”. Hiscox said it is “operationally strong in the face of unprecedented global uncertainty”.
Hiscox’s trading update comes after insurers were accused of not “sharing the pain” of coronavirus with other businesses.
Insurance consultancy Mactavish found at least five insurers have recently removed cover from their policies because of coronavirus.
That means around 500,000 firms who renewed their business insurance at the end of March will have seen higher premiums and narrower cover.
“We have customers getting less cover and paying more for this, whilst insurers and brokers are seeing their financial rewards increase,” Mactavish chief executive Bruce Hepburn said.
“It doesn’t feel like insurers and brokers are sharing the pain of businesses across the UK.”
Hiscox is one of several FTSE insurers to suspend their dividends over coronavirus.
However, Legal & General is pushing ahead with a £750m dividend despite Bank of England pressure to suspend it.