Small firms demand £52m from insurer Hiscox

Hundreds of struggling small businesses have demanded £52m from Hiscox to cover losses they suffered during the pandemic.

Lawyers for the Hiscox Action Group wrote to the insurer this week urging it to either pay up or take part in an accelerated arbitration process to decide who is in the right.

Hiscox has faced fury from companies which thought they would get a business interruption payout after being forced to close during the lockdown - only to be told that their policies did not apply in the circumstances.

Richard Leedham, a lawyer at Mishcon de Reya who is representing the 397 businesses, said the private legal process of arbitration could test if claims are valid and how much claimants should be paid.

Hiscox is one of eight insurers that will appear in a separate  High Court action launched by the Financial Conduct Authority (FCA) to test ambiguous insurance policies.

The insurer has insisted that most of its business interruption policies do not cover losses suffered by firms during the current crisis.

Simon Ager, a climbing centre boss and member of the action group, said: “Our claim is for both the original sums insured and the additional costs incurred because Hiscox has dragged its feet. This makes it very likely that the eventual claim will be much higher than the initial £52 million figure.”

Hiscox has offered goodwill payments to some small businesses to apologise because it failed to make clear that pandemics were not covered when it sold them interruption insurance.

A Hiscox spokesman said the insurer would consider the letter and respond appropriately.

She said: “We do understand these are difficult times for businesses and we are paying claims that are covered by the policies we issue fairly and quickly.

"We also welcome all proposals to expedite resolution of any dispute, which is why we have agreed to participate in the FCA’s expedited court-based process.”

Mishcon de Reya also announced it had received agreement in principle from a litigation funder to launch a class action-style lawsuit on behalf of dentists whose claims were refused by QBE, another insurer.

QBE declined to comment.