The action group speaks to Insurance Times about the claims against Hiscox and how a specific area of the law could come back to haunt insurers incorrectly refusing claims

Business interruption claims against insurer Hiscox are mounting up.

Earlier in April, a group led by film company Media Zoo alleged that Hiscox is trying to avoid paying out what they believe to be legitimate business interruption claims.

And this week TV celebrity chef Raymond Blanc revealed that he was also in a battle with Hiscox over a business interruption claim that he had failed to get a payout on, as a result Blanc was forced to shut 37 of his premises stating that it was “hugely disappointing” that its primary insurer and business partner had responded in this manner.

But could the Enterprise Act 2016 (EPA 2016) be the means by which businesses are able to hold insurers to account?

The EPA 2016 came into force in May 2017 and looks at the right to claim damages for late payment of insurance monies.

It states that if the insurer drags its feet, it becomes liable to special damages. The act introduces an implied term to every contract of insurance that insurers must pay any valid claims within a reasonable time.

Mark Killick, creative director at Media Zoo is part of the Hiscox Action Group steering committee, a voluntary group set up as a united front to address and challenge denials of business interruption claims by Hiscox.

He told Insurance Times: “It [EPA 2016] is designed to prevent insurers coming up with reasons not to pay. Hiscox is laying themselves open for a massive claim, every company that goes under – all consequent losses will fall to Hiscox.

”I think Hiscox dragging their feet is putting themselves in an existential threat position because the potential losses that they will take on will be ten times the size of the claims they are facing.”

He said that at a time when businesses are bleeding because of lockdown, Hiscox has played down the scale of the claims. 


Killick said that a number of businesses represented by the action group were originally told by Hiscox’s claims team that they were covered, but that the insurer later made a u-turn.

The Hiscox Action Group said that the insurer has now raised a number of issues about their claims, something that Killick is challenging.

Firstly, the Hiscox policy states that for a claim to be made, there must be an instance of the infectious disease, in this case Covid-19, within one mile of the business premises covered by the policy.

Killick, said that given the nature of coronavirus and the lack of testing of the general population, it is impossible to provide evidence of such infections near business premises.

He also said that, regardless of the distance of any infectious disease, Hiscox’s business interruption policyholders should be covered under section 11 of the policy wording, which states a business is covered for the ”inability to use the insured premises due to restriction caused by a public authority due to… an occurrence of a human infectious or human contagious disease, an outbreak of which must be notified to the public authority”.

Killick, however, claims that Hiscox is refusing to pay out on these grounds because it does not deem the government a public authority, and also because it believes the businesses in the Hiscox Action Group closed down their premises of their own accord, not because of direct instructions to close down from a public authority.

Finally, Killick claims that Hiscox said that it was not the intent of the policy to run this wide and cover pandemics. 

The Hiscox Action Group is therefore arguing that while it may not have been Hiscox’s intent to cover the pandemic, the policy wording is written in a way that does not exclude specific diseases and that pandemics should, therefore, be covered under the policy.

No obligation

Meanwhile, a spokesperson for Hiscox responded: “Where the application of a policy is disputed, our focus is on helping to provide customers with greater certainty.

”A fair and fast resolution is in everybody’s interests, which is why we will work with the UK insurance industry, our regulators and customers to seek an expedited resolution through the range of existing independent mechanisms.

”We understand these are incredibly difficult times for businesses and we are paying claims that are covered by the policies we issue fairly and quickly. We review every case individually, and if any customer has concerns about the application of their policy, we encourage them to get in touch with us directly.”

In addition to this, the Association of British Insurers states that standard business interruption policies are designed to cover standard risks, they are therefore unlikely to provide cover for the full effects of global pandemics, and insurers would have no obligation to pay out claims in relation to Covid-19. This includes fored closure by the authorities. 

A statement on the ABI’s website states: ”For specific notifiable disease extensions, cover may apply if other policy conditions are met. However, this type of extension is not commonly included as standard.

”Furthermore, the likely costs to businesses of cover that would consist of more unusual risks – such as those posed by new diseases – would be prohibitive.”

How it all began?

Killick’s story began when Media Zoo was impacted by a business interruption claim that was refused by Hiscox.

At the time, Killick said: “The policy terms are clear and unambiguous. Hiscox’s refusal to pay out on legitimate insurance claims at a time like this is shocking and threatens businesses across the UK.”

Media Zoo spent £13,425 on its Hiscox policy and particularly wanted office closure protection to insure it for any inability to access its state-of-the-art post-production area.

Media Zoo’s managing director Rachel Pendered added: “We took out the Hiscox Business Interruption insurance believing the company would honour its obligations. To find out that it has no intention of doing so simply because it is going to be expensive is shocking.”

The firm wrote to MP and secretary of state for Business, Energy and Industrial Strategy (BEIS) Alok Sharma urging him to intervene.

Read more…Briefing: This pandemic has badly damaged Hiscox - insurers and brokers must learn the lessons

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