It now expects to pay out $150m (£121m) if the disruption caused by lockdown restrictions continues for a further six months from March.
If these restrictions on travel and mass gatherings are extended beyond six months, Hiscox predicts that these claims could increase by an additional $25m (£20m).
The prediction came as Hiscox conducted further analysis of its exposure to the ongoing pandemic due to an ongoing “material uncertainty” of its effects.
Hiscox is also receiving claims as a result of economic losses following government measures to prevent the spread of Covid-19.
Hiscox UK has approximately 10,000 customers that purchased cover for business interruption and have been directly impacted by the nationwide lockdown.
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.
Hiscox therefore claimed that the “level of economic loss experienced is likely to be materially lower than reported revenues”.
In a statement, the insurance giant said: “A number of UK policyholders have disputed the application of their policy in relation to business interruption. Hiscox recognises these are extremely difficult times for businesses and is determined to help provide greater certainty for customers.
It added: “Hiscox’s capital, liquidity and funding positions remain robust and the group remains operationally strong in the face of unprecedented global uncertainty presented by the COVID-19 pandemic.
“Hiscox expects this uncertainty and consequent capital contraction to influence rates across wholesale and reinsurance markets.”