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Hiscox sets aside another US$48mln after coronavirus business insurance judgement

Supreme court judge Lord Hamblen said the FCA had “substantially” won its case.

Hiscox, Ltd. -

Hiscox Ltd (LON:HSX) said today’s ruling by the UK Supreme Court on the eligibility of thousands of small businesses for coronavirus cover would cost it an additional US$48mln.

The insurer added that it ‘welcomed’ the clarity provided by the final judgment and that settlement of eligible cases had begun.

Hiscox added that the ruling confirmed that fewer than one-third of its 34,000 UK Business Interruption policyholders can claim.

The £1.2bn dispute between the insurers and policyholders centred on whether their business interruption policies covered the disruption when the first lockdown came into force in March.

Financial regulator the FCA brought a test case against eight insurers including Hiscox and RSA after thousands of small business policyholders were told they needed specific cover to lodge a claim.

After an initial ruling in September, both sides agreed to fast track an appeal to the Supreme Court for a final judgement.

After that judgment, Hiscox said it expected the cost of claims to be less than £100mn net of reinsurance.

Supreme court judge Lord Hamblen said the FCA had “substantially” won its case.

Lord Briggs, another of the judges, added;  "On the insurers' case, the cover apparently provided for business interruption caused by the effects of a national pandemic type of notifiable disease was in reality illusory, just when it might have been supposed to have been most needed by policyholders.”

The judgment, which covers 50 insurers and 400,000 policyholders, represents the final outcome of the Industry Test Case, and there can be no further appeals, Hiscox added.

Richard Leedham, who represented the Hiscox Action Group - told the BBC: "This is a landmark victory for a small group of businesses who took on a huge insurance player and have been fully vindicated."

Sheldon Mills, from the FCA, added:  Today's judgment decisively removes many of the roadblocks to claims by policyholders.

"We will be working with insurers to ensure that they now move quickly to pay claims that the judgment says should be paid, making interim payments wherever possible."

Shares in Hiscox, which is valued at  £3.35bn, rose 3.5% to 1,000p.

Quick facts: Hiscox, Ltd.

Price: 906.8 GBX

LSE:HSX
Market: LSE
Market Cap: £3.14 billion
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