Hiscox is set to lose another US$40 million (around AU$56.7 million) if coronavirus-related travel and commercial restrictions carry on next year, the London-based insurer has revealed.
In its recently released third quarter financial results, the insurer said the potential pay-outs will come on top of the nearly US$387 million (around AU$548.7 million) it has already allocated for claims related to the first lockdown in March.
The announcement comes as the UK gears up for another nationwide lockdown this week to curb the resurgence of COVID-19 infections.
Hiscox said it had already set aside about US$150 million (around AU$213 million) for event cancellation insurance in the first half of 2020 and another US$25 million (around AU$35.4 million) for claims if mass gathering restrictions continue until the year’s end.
“If these restrictions continue into 2021, Hiscox has an additional US$30 million to US$40 million (around AU$42.5 million to AU$56.7 million) potential exposure relating to event cancellation,” the insurer said as reported by Law360.
The firm added that it has allotted more than US$130 million (around AU$184.4 million) for business interruption claims.
Hiscox was among the defendants in a test case brought by the Financial Conduct Authority (FCA) on behalf of about 370,000 policyholders denied cover for COVID-19-related business losses. The High Court ruled largely in favour of the businesses on September 15.
The insurer has since joined five other carriers, the FCA and a policyholder action group in filing a “leapfrog application” to appeal directly to the Supreme Court over the judgement. The appeal has been approved and the hearing set for November 16.
“Hiscox recognizes these are extremely difficult times for businesses and is committed to seeking an expedited resolution to contract disputes relating to business interruption through the industry test case,” the company told Law360 on Monday.