Bermuda-based insurer Hiscox has said it welcomes the intervention from the FCA over business interruption insurance disputes. The insurer is facing the prospect of group legal action from more than 300 businesses over the denial of their claims. In its first-quarter financial results, the insurer stated: “Along with the Association of British Insurers, we welcome the FCA’s recent initiative to accelerate resolution of disputes in the industry over the application of property policies relating to business interruption.” Hiscox released shares to raise £375m, which it said will be used for “growth opportunities and rate improvement” in the US, and predicts its exposure to business interruption payments will be between £10m and £250m.
Two US members of the House of Representatives have tabled bills that would force insurance companies to cover the forced government shutdown of businesses under their interruption policies, as well as closure due to virus and pandemic events, in the future. Congressman Brian Fitzpatrick, a Pennsylvania representative, put forward the Never Again Small Business Protection Act 2020, which would force insurers to pay out for at least 30 days if businesses closed due to federal, state, or local government-ordered business shutdown, as long as businesses don’t cut staff and maintain their health insurance coverage. The bill would also mandate that the Federal Advisory Committee on Insurance look into the possibility of a federal backstop for small business access to business interruption insurance.
The second bill came from Mike Thompson, representative for California. His Business Interruption Insurance Coverage Act of 2020 would force insurers to include both virus and pandemic risk in their business interruption policies, along with forced government closure. Both bills would only allow an exclusion for any of the risks mentioned to be enforced if an insurer received a written declaration agreeing to it.