Members of the Hiscox Action Group have reached a settlement with the insurer relating to business interruption losses suffered as a result of Covid-led lockdowns.
The action group said the settlement is in line with the Supreme Court judgment on business interruption clauses, and that both parties were satisfied with the outcome.
Both Hiscox and the action group agreed that the terms of the settlement would stay confidential.
Hundreds of thousands of businesses that were forced to close during the pandemic or faced significant losses made claims on their business interruption insurance, but leading insurers disputed the claims, arguing their policies did not cover the restrictions.
As a result, in late 2020 the city watchdog ran a ‘test case’ on behalf of business interruption policyholders seeking legal clarity on their Covid-19 losses, of which Hiscox was one of seven insurers involved.
Ultimately, the Supreme Court largely ruled in favour of the policyholders, paving the way for business interruption payouts related to Covid-19.
According to recent figures from the Financial Conduct Authority, Hiscox faced paying out the largest number of business interruption (BI) claims, having at the time accepted 6,692 BI claims for Covid-19 losses, with a decision still to be made on whether another 3,122 pending claims were valid.
The aggregate value paid out in interim or initial payments across insurers so far is more than £2bn.
Groups of hospitality companies that have had their business interruption claims refused have come together to potentially take legal action against their insurers.
City A.M. understands groups have been formed to potentially take against insurers Axa, Aviva, Alliance, RSA, Tokio Martine and NFU, some of which contain more than 50 members.