Hiscox leads pack in accepting UK BI Covid claims through June: FCA data
Close to half of all newly accepted UK claims during June for Covid-related BI losses were attributable to Hiscox, according to Insurance Insider’s analysis of the latest regulatory data.
According to the latest monthly BI data release from the Financial Conduct Authority (FCA), 40,531 UK BI claims for Covid-related losses have now been accepted by firms since the Supreme Court ruled on the test case in mid-January.
The figures show a general acceleration of acceptances, with a 2.8% rise in April compared with March, followed by a 3.5% monthly increase in May and a 7.5% rise during June.
The FCA’s monthly updates cover policies that are, in principle, capable of responding to Covid-19 losses, but do not represent contracts of large legal risk, and where more than five claims have been made.
Analysis of the regulator’s data by Insurance Insider shows that the increase in accepted claims during June was significantly higher than in the preceding two months.
Hiscox Insurance drove much of the 7.5% increase in June, after it reached a settlement with Hiscox Action Group – which represented around 400 policyholders – via a private arbitration process.
Of the 2,829 newly accepted BI claims during the monthly period covered by the latest update, 1,254 were accepted by Hiscox – equivalent to 44% of the total.
Hiscox is one of eight companies to have accepted more than 2,000 such BI claims in total since January.
However, the other insurers in this category – including Axis Managing Agency, MS Amlin Underwriting and Axa Insurance UK – saw only trivial movements in total accepted claims between May and June.
Additionally, Hiscox has more pending claims than the combined total across the other seven firms listed above – and now accounts for over a third of the total claims for which an assessment of validity remains outstanding.
Collectively, the 62 legal entities which reported to the FCA for its latest release – including those which submitted nil returns – have 6,900 claims submitted which are still pending.
Settlements also increasing
Amid this increase in accepted claims, the proportion that have been settled in full also continues to grow.
According to the FCA’s latest figures, 47% of all accepted claims since January have now been paid in full, with the total value of these final payments standing at £567mn. In the previous month’s release, 43% of accepted claims had been fully settled at a total value of £467mn.
Among the eight firms with more than 2,000 accepted BI claims, Covea continues to lead the way on payments. Only 9% of its accepted claims have not yet been settled.
Axis Managing Agency and Allianz Insurance are close behind, with 83% and 80% of their accepted claims, respectively, having been paid in full.
At the other end of the scale, Hiscox has the highest proportion of accepted claims still awaiting full settlement – despite paying 870 claims in full during the month, the highest number of any single insurer.
Gathering all the relevant data necessary to calculate the total value of a claim remains a challenge for insurers.
To illustrate, while Hiscox has paid out a low percentage of accepted claims, it has settled almost all (92%) of the claims for which it has received all the information it needs.
Only Axa Insurance – which reported to the FCA once again that it had settled every claim for which it had complete data – fares better by this metric.
In contrast, QBE UK – which has received all necessary information for 1,127 of its 2,396 accepted claims – has paid only 69% of these data-supported claims in full.
However, the firm does appear to have changed its strategy on making interim payments where complete data is not yet available. After making only 68 in total during the period to 31 May, in the month of June it made 105 such payments.
The FCA does not publish data on amounts paid out by individual firms, but in aggregate the interim amount paid out in respect of unsettled claims increased from £290mn to £309mn.