The insurer Hiscox has agreed a settlement with a group of about 400 companies over business interruption losses suffered as a result of lockdowns during the Covid-19 crisis.
Thousands of businesses tried to make claims with insurance companies at the start of the pandemic in 2020 but many refused to pay out.
However, a test case at the supreme court in January this year found that six major insurers, including Hiscox, should make payments totalling about £1.2bn.
The Hiscox Action Group, representing the 400 businesses, also participated in the hearing and announced on Monday that a settlement has been reached. Both sides agreed that the amounts should remain confidential.
Hiscox said in March that it regretted the “uncertainty and anguish” caused by the court wrangle and subsequently revealed it had set aside £341m to cover pandemic-related payouts.
In a joint statement, Hiscox and the action group, funded by Harbour Litigation Funding, said: “The settlement is in line with the supreme court judgment, and the proceedings have now been resolved to the mutual satisfaction of all parties.”
The supreme court test case was brought by the Financial Conduct Authority (FCA) to assess whether insurers were entitled to exclude insurance claims made against the Covid-19 pandemic.
Judges found that policies should provide cover and the FCA urged insurers to pay out to about 370,000 businesses thought to be affected.
Britain’s highest court said policyholders had a right to payouts from insurers who had argued many business interruption policies did not cover widespread disruption after government efforts to curb the virus from March 2020.
The judgment did not detail the size of the payments insurers needed to make.
The FCA said earlier this month that £757m in interim or final payments had been made by insurers to policyholders so far.
Hiscox has accepted almost 8,000 claims for business interruption payments, the most among about 50 insurers that have accepted claims, according to FCA data.
The insurer had made interim or final payments on more than 2,000 claims as of 31 May, the FCA data showed.
Josianne El Antoury, an associate at the law firm Covington, said there was likely to be more litigation in Britain around business interruption payments, on issues not directly addressed by the judgment.
“The FCA test case has been great in terms of providing guidance but it isn’t the be-all and end-all,” she said.BUSINESS NEWS • ECONOMIC NEWS • MAKE MONEY • News