Hiscox paying up to 800 BI claims a month despite policyholder information struggle

Insurer Hiscox is paying between 600 and 800 coronavirus-related business interruption (BI) claims a month, however the “biggest challenge” hampering the progress of prompt claims settlements is “actually getting people to give us the information to do it”, according to outgoing Hiscox chief executive Bronek Masojada.

Following the publication of Hiscox’s quarter three trading update, published on 2 November 2021, Masojada told Insurance Times that the insurer has so far accepted around 10,000 BI claims that were submitted as a result of the Covid-19 pandemic and the government’s mitigating measures.

As of September 2021, Hiscox “had paid over half of the claims we have accepted, either in an interim or full payment”, which Masojada described as “good progress”.

Within its Q3 financial report, Hiscox confirmed it had made final or interim BI claim payments to 5,153 policyholders as of 30 September 2021, marking a 60% increase on the number of BI claims it had paid at 30 July 2021.

Hiscox stated that its group net Covid-19 loss estimate remains at $475m (£354m) for 2020 and $17m for 2021’s lockdowns.

The report read: “We have been working closely with customers and brokers in the UK to pay business interruption claims as quickly as possible.

“Whilst claims frequency is higher than estimated, the severity is lower, resulting in business interruption claims in aggregate continuing to settle within the actuarial best estimate.

“The UK business interruption book has now been fully renewed with the appropriate pandemic exclusion terms. We have maintained continuous and transparent dialogue with our reinsurance panel throughout this period and the reinsurance recoveries are now being made.”

Filling in the blanks

Despite making steady progress through its BI claims backlog, Masojada explained that “the challenge, quite frankly, isn’t our willingness to pay the claims - it’s actually getting people to give us the information to do it”.

He continued: “We’ve accepted about 10,000 claims and we’ve sent an email to every person who’s got a valid claim and said ‘please provide us with the following information’. There’s quite a big gap between what we’ve sent and what people have responded to.

“The big check is getting people to respond - people are busy, people are getting on with their businesses and that’s the challenge.”

Post-pandemic marketing

Hiscox’s trading update also revealed the insurer’s plan to launch “a UK brand campaign, including both outdoor advertising and a fully refreshed digital marketing strategy”.

Masojada emphasised that this advertising drive is not connected to the industry-wide reputational slur arising from the FCA’s BI test case action, but is instead more to do with the UK’s economy reopening following the government’s lockdown restrictions being lifted in July 2021.

“As the economy opens up and people are out and about, that makes spending money more worthwhile,” he explained.

“The reality is everyone who doesn’t have claim, the BI thing is all behind them and they’re focused on opening up their businesses.”

Masojada also pointed to the fact that Hiscox UK has added 34,000 customers to its book in the first nine months of 2021. “That’s saying to me that customers are still coming to Hiscox,” he added.

Hiscox’s chief financial officer and incoming chief executive Aki Hussain agreed with Masojada.

He told Insurance Times: “We have gone ‘dark’ with regards to [marketing] this year. We’ve not had marketing campaigns out there. That’s somewhat unusual for us.

“Now that’s partly been affected by people being in lockdown with Covid and we have to think about whether the money that we’re investing in our marketing is going to be seen by people.

“As the economy is opening up and people are out and about, we are putting together a campaign, so you should expect to see that before the year is out. And that will drive our new business growth into 2022 in our UK business.”