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UK insurer Hiscox has reportedly agreed to settle class action claims made by a group of about 400 companies alleging their business interruption insurance claims during the COVID-19 pandemic were improperly denied.
Hiscox and The Hiscox Action Group, which represents approximately 400 businesses, announced the agreement Monday, reports Business Matters. Both the insurance company and the group of businesses are keeping the total settlement amount confidential, but, in March, Hiscox reportedly said it had set aside £341 million for coronavirus-related business interruption claims.
The Hiscox settlement agreement is the latest development in the long saga of business interruption insurance claims made due to the COVID-19 pandemic and related lockdowns that policyholders say were improperly denied by their insurers.
Collective litigation, similar to a class action lawsuit, began shortly after coronavirus hit the UK, resulting in forced lockdowns on major sectors of the economy. Approximately 500 companies from two groups, the Night Time Industries Association (NTIA) and the Hiscox Action Group, came together in March of last year to pursue litigation against the insurance company Hiscox.
The groups alleged that Hiscox’s business interruption policies, sold to companies prior to the pandemic, included a payout if a business was forced to shut down because of a notifiable disease.
But when the businesses tried to file their claims, they were told their business interruption policies did not, in fact, cover the pandemic-induced closures.
Claims against Hiscox, along with several other UK insurers, were consolidated by the Financial Conduct Authority (FCA) into an expedited test case heard by London’s High Court in September. The High Court determined that the insurance companies had wrongly denied the COVID-19 business interruption claims.
In January, the highest court in the country upheld the ruling, determining that small businesses in Britain may be entitled to about £1.2 billion in compensation from insurers for COVID losses.
The £1.2 billion determined by the high court was to be distributed amongst nearly 400,000 policyholders claiming COVID losses. In addition, the ruling affected at least 60 insurance companies.
Hiscox has reportedly accepted nearly 8,000 business interruption insurance claims – more than any other insurer, according to Business Matters. Final payouts have been made on more than 2,000 of these claims.
Are you waiting for a business interruption insurance payout after a claim you made during the coronavirus pandemic? Tell us about it in the comment section below!
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