INSURANCE giant Hiscox has moved to quell unrest among businesses angry over its stance on payouts related to the coronavirus crisis.

As the threat of legal action by customers was raised, the insurer said it would strive to reach agreement that involves regulators and the wider industry.

The London-listed company said it expects to pay up to $175 million to settle claims due to restrictions on events, mass gatherings and travel because of the coronavirus pandemic.

The specialist insurer said it is settling claims and will face a $150m bill if travel restrictions and social distancing are in place for six months from March, and more if this is extended.

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It comes as the Night Time Industries Association announced that it will be coordinating legal action against Hiscox over its coronavirus payout position.

The company said its “core small commercial package policies” do not provide cover for business interruption caused by the Government’s coronavirus response.

The firm said that its exposure to the virus is limited to event cancellations.

Hiscox said in its statement to the London Stock Exchange a number of UK policyholders have disputed the application of their policies related to business interruption.

It said: “Hiscox recognises these are extremely difficult times for businesses and is determined to help provide greater certainty for customers.

“As a priority it will therefore work with the UK insurance industry, its regulators and its customers to seek means of expediting resolution through the range of independent mechanisms available.”

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The insurer has faced challenges from business owners including celebrity chef Raymond Blanc, who reportedly said he had enlisted lawyers after Hiscox denied his restaurant business a payout for virus-related losses.

Hiscox said it is “actively settling claims for event cancellation and abandonment, media and entertainment and other segments including travel”.

“On the basis that disruption caused by restrictions on travel and mass gatherings continues for a six month period from March 2020, Hiscox expects to pay net claims totalling up to $150m.

“In the event that restrictions on travel and mass gatherings are extended beyond six months, Hiscox expects that these claims could increase by an additional $25m.”

“Hiscox is also receiving claims as a result of economic losses following government action to stop the spread of Covid-19.

“Like others in the industry, Hiscox UK’s core small commercial package policies do not provide cover for business interruption as a result of the general measures taken by the UK government in response to a pandemic.”

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The company also said in its statement that it has “approximately 10,000 customers that purchased cover for business interruption and have been directly impacted by mandated government premises closure to stop the spread of Covid-19”.

It said: “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.

“The level of economic loss experienced is likely to be materially lower than reported revenues.”

In opposition, Michael Kill, chief executive of NTIA, said: “We have instructed Philip Kolvin QC, the leading industry barrister, to advise on our members’ rights under their insurance policies.

“We want to talk urgently to any businesses within the hospitality and leisure sector which have a policy with Hiscox and would like to join the current group of over 100 claimants to progress a legal case against the company."

Separately, the Hiscox Action Group was reported as describing the company’s statement as “incredibly disappointing”, insisting it is “refusing to accept its contractual obligations.”

Shares in Hiscox closed 1.25%, or 10p, down, at 787.4p.

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