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Hiscox settles with action group in BI arbitration

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Hiscox has reached a settlement with the Hiscox Action Group (HAG) following a private arbitration process over Covid-19 BI claims.

The HAG, which represented around 400 policyholders and was backed by litigation funder Harbour, launched an expedited arbitration process in May last year.

The group, advised by law firm Mishcon de Reya, also participated in the Financial Conduct Authority’s (FCA’s) test case on Covid-19 and BI, in which Hiscox and seven other carriers took part.

The arbitration, however, was to determine matters between the parties that were not resolved by the test case.

Hiscox said the settlement agreed in the arbitration was “in line with” the Supreme Court judgment on BI, which was handed down in January and in which the court found “substantially” in favour of the FCA, rather than insurers.

The carrier noted that the matter has been resolved “to the satisfaction of all parties” but no details were given on the settlement terms.

The Supreme Court in January found substantially in favour of the FCA and the HAG in the appeal of the BI test case. The court sided with the High Court that many policies provide cover in principle for losses caused by Covid-19, while overturning several key rulings that had gone the way of insurers.

Hiscox has been the subject of significant scrutiny and criticism over its handling of the BI issue, having initially insisted that its small business policies did not provide cover for BI claims arising from pandemic-related losses.

According to the FCA’s latest BI claims data, Hiscox has accepted more than double the number of any other carrier’s claims, but has the lowest proportion of claims paid in full so far.

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