Hiscox policyholders have been given the green light to launch legal action against the group following the insurance giant’s denial of lockdown insurance claims amid the ongoing pandemic.
It comes as pressure groups have warned that Hiscoxs’ actions are risking the closure of thousands of businesses, according to the Financial Times.
Hiscox allegedly sold policies before the pandemic hit the UK, stating it would pay out when a business was forced to shut owing to a notifiable disease.
Hundreds of business owners have now filed claims to Hiscox and other commercial insurers only to be told their business interruption policies do not cover the pandemic.
According to the paper, the newly-formed Hiscox Action Group has been given the go-ahead from lawyers to launch legal action against the insurer, representing over 400 policyholders who have nearly £40m in claims.
Law firm Mishcon de Reya is now expected to launch an “expedited arbitration claim” against Hiscox in the next few days, and has advised members of the group that they have a “good chance” of success.
The action will also be financed by litigation funder Harbour. The Hiscox Action Group is one of several pressure groups that have recently been launched to support businesses during the ongoing coronavirus pandemic.
The Night Time Industries Association (NTIA) previously announced it was coordinating action to be taken against Hiscox over claims it has misled customers in light of the pandemic, for example.
The proposed legal action follows claims that 127,000 UK businesses could close if denied pandemic-related business interruption claims, according to pressure group Covid Claims Group.
A spokesperson for Hiscox told the Financial Times said: “We understand these are difficult times for businesses and we are paying claims that are covered by the policies we issue fairly and quickly.
“As the FCA has said, most UK small business policies across the industry do not cover pandemics. As we have said previously, we welcome all steps to expedite resolution of any dispute and we look forward to working with policyholders to achieve this.”