Shares in property, casualty and London market insurer Hiscox (HSX) climbed as much as 20% to 915p after it appeared that its costs for business interruption (BI) claims would be less than feared and it posted a ‘resilient’ performance in the third quarter to date.
Along with seven other insurers, Hiscox had been waiting on a High Court judgement in the UK insurance industry test case brought by the Financial Conduct Authority (FCA).
The case, which hinged on the contractual interpretation of the wording of contracts covering business interruption, sought to establish the extent to which the insurance companies were liable for costs incurred by firms which were forced to shut down during the pandemic and which had BI cover.
Today’s High Court judgement ‘clarifies that fewer than one third of Hiscox's 34,000 UK business interruption policies may respond. Coverage under these policies is essentially limited to those customers who were mandatorily closed by Government orders, and then only in certain circumstances.’
As a result, the company estimates that additional claims will be less than £100 million net of reinsurance. This figure ‘encompasses claims from all divisions including Hiscox Re and is a reduction of £150 million from the upper end of the group’s previously published risk scenario.’
Meanwhile, the firm reported a solid performance in the quarter to date with gross written premiums up 19% in July and August. The London market division continued to see ‘strong rate improvement in the majority of classes’, while Hiscox Re and ILS saw ‘accelerated rate momentum’ and double-digit premium growth at the July renewals.