Hiscox takes £190m pandemic hit

Legal loss tarnished insurer’s reputation and battered its bottom line

INSURANCE group Hiscox today issued a formal apology for the “uncertainty and anguish” caused by its legal battle over pandemic payouts as it announced a $268 million (£193 million) pre-tax loss in 2020.

Shares dived by 11% in early trading on the back of the profits crash, driven by $495 million of claims from business shutdowns and event cancellations.

The London-listed insurer was ordered in January to pay out on many disputed business interruption policies after a legal battle at the Supreme Court.

Chief executive Bronek Masojada said: “We clearly regret the uncertainty and anguish that the dispute has caused to our customers, so it is important that we learn from this experience.

“The most important lesson is the need for clarity in wordings, to ensure intent is properly reflected.

“Hiscox has undoubtedly suffered some brand damage this year.”

The company announced it would not be paying a final dividend for the year, sending the share price to a five-month low, and said that executive directors would also forgo their cash bonuses.

It was one of the insurance firms to lose the legal challenge over payments to some 37,000 businesses including pubs, cafes and wedding planners whose disputed claims were collectively worth around £1.2 billion.

However, Masojada said the group was looking forward “with confidence” as Covid-19 restrictions start to unwind globally: “In 2021, our priorities will switch from resilience to opportunity as we are well placed to make the most of the best conditions in the London market in many years.”

Prices of commercial insurance have been driven higher by the scale of pandemic claims, leading insurers to expect an improvement in returns.

Chairman Robert Childs said: “For the first time, our reputation for paying claims quickly and without fuss came under intense scrutiny. We regret any dispute with a customer, but particularly where the policy wording was not as clear as it should have been.”

Shares plunged 108.8p, or 11.08%, to 872.8p this morning.