Insurer Hiscox swung to a full-year loss driven by the impact of the Covid-19 pandemic and pulled its final dividend as it was hit by higher business claims after losing a court case over policy wordings last in January.
The company on Wednesday reported a pre-tax loss of $268.5m, compared with a profit of $53m. Gross premiums written maintained at $4bn “in challenging conditions”. Covid-19 reserves were unchanged at $475m.
Hiscox admitted that its brand had been damaged after it, and several other insurers, argued that a large number of business interruption policies did not cover disruption caused by government measures to curb the virus. A test case taken on behalf of businesses by regulators was victorius.
Following the Supreme Court judgment, the group estimated exposure to restrictions already announced in 2021 to be less than $40m if restrictions extend to the end of June.
The company said its exposure to potential business interruption claims arising from further UK government restrictions to contain the spread of Covid-19 had been running off at approximately 8% per month from June 2020, with residual exposure to be largely run off by the end of June 2021.
“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,” said chief executive Bronek Masojada.
“The most important lesson is the need for clarity in wordings, to ensure intent is properly reflected in the policy detail. In addition, the customisation of policies has to be restricted to ensure that there is not a long tail of wordings serving very small numbers of customers. In 2021, we have commenced a series of initiatives aimed at addressing these issues.”
