Hiscox has announced that its core policy wordings do not provide cover for business interruption caused by government measures amid the ongoing pandemic.
The group has now set out additional details on its business interruption exposure “in light of recent market speculation”.
The insurance group clarified that it provides business interruption cover to SMEs as part of its small commercial package policies, and approximately 10% of its small commercial package customers have purchased cover for business interruption.
Of those who do purchase cover for business interruption, Hiscox estimated that 10,000 have been directly impacted by mandated government closures amid the nationwide lockdown.
Over 70% of these customers have monthly revenues of less than £40k in a normal trading environment, with a “significant proportion” below £10k per month.
It added that the economic loss experienced by these businesses is likely to be materially lower than revenues in a normal trading environment.
In its latest statement, the insurer assured that Hiscox Retail has “substantial” reinsurance cover in place.
It added that the group publishes a realistic disaster scenario which estimates a net loss of $175m (£140m) for losses emanating primarily from event cancellation, entertainment and travel in a global pandemic scenario.
It said it is proactively paying claims for these lines of business and the claims are progressing in line with its expectations.
In addition, the insurer believes that its business interruption exposure is limited in Europe and it has “negligible exposure” in its US retail business.
Hiscox will also provide a further update to the market “clarifying its potential exposures” within the next week.