Raymond Blanc takes legal action against insurer Hiscox

Raymond Blanc

The restaurant group led by Raymond Blanc has called on its  lawyers after being denied a payout by the insurer Hiscox.

Blanc, chef patron at Brasserie Bar Co, has had to close all 37 of his pubs and restaurants due to Covid-19. The chain, which employs 1,400 staff, took out business interruption insurance from Hiscox, which covers damage caused by “an occurrence of any human infection or . . . contagious disease” provided a local authority was notified.

“We are eager to reopen — we have a good, solid business that we have grown over 20 years,” said Blanc, 70.

Hiscox has said its policies were not “designed or priced to cover the extraordinary circumstances” caused by the coronavirus pandemic.

Bermuda-headquartered specialist global insurer Hiscox has broken its silence after hitting the headlines recently over its business interruption policies.

Hiscox, however, did not address any specific coronavirus-related claim. Neither did the firm comment on the looming lawsuit it faces against the Hiscox Action Group.

On Wednesday afternoon, Hiscox released a market update to say that its “core policy wordings do not provide cover for business interruption as a result of the general measures taken by the UK government in response to a pandemic.”

The group, which believes its coronavirus BI exposure is limited in Europe and negligible in the US, reported: “Hiscox UK provides business interruption cover to SMEs as part of its small commercial package policies. Approximately 10% of Hiscox UK’s small commercial package customers purchase cover for business interruption.

“Of those who do purchase cover for business interruption, Hiscox estimates approximately 10,000 have been directly impacted by mandated government closure to stop the spread of COVID-19. Over 70% of these customers have monthly revenues of less than £40,000 in a normal trading environment, with a significant proportion below £10,000 per month.”

The insurer went so far as to say that the level of economic loss experienced by these businesses is likely to be materially lower than revenues in a normal trading environment. It added that Hiscox Retail has substantial reinsurance cover in place.

“Hiscox publishes a realistic disaster scenario which estimates a net loss of $175 million for losses emanating primarily from event cancellation, entertainment, and travel in a global pandemic scenario,” noted the company. “Hiscox is proactively paying claims for these lines of business and the claims are progressing in line with its expectations.

“Hiscox will provide a further update to the market clarifying its potential exposures within the next week, upon completion of on-going business analysis and assessment.”

Prior to Hiscox’s statement, the Financial Conduct Authority (FCA) reminded insurers providers – without singling out anyone – to compensate policyholders with legitimate claims.

“There are policies where it is clear that the firm has an obligation to pay out on a policy,” FCA interim chief executive Christopher Woolard told insurance CEOs in a letter yesterday morning.

“For these policies, it is important that claims are assessed and settled quickly. A key objective of the FCA is to ensure that financial pressures on policyholders are not exacerbated by slow payment, rather, such claims should be paid as soon as is possible.”