Hiscox has vowed to learn from the past after being bruised by the Covid-19 pandemic, particularly with regard to disputes around business interruption claims.

The Bermudian-headquartered global specialist insurer said it recognised that its brand had suffered some damage as a result of the disputes.

Robert Childs, chairman of Hiscox, said the group’s values had been tested and the trust it had "painstakingly built over many years“ had been challenged ”to our dismay“.

He said a commitment to putting things right for its customers has long been the cornerstone of the Hiscox brand. He added: “During times like these we have to dig deep, go back to our core values, recognise where we need to improve and learn from the past.”

Bronek Masojada, chief executive officer of Hiscox, said the company regretted the uncertainty and anguish that the dispute has caused its customers, and said it was important that it learn from the experience.

Hiscox expects to pay $475 million in Covid-related claims net of reinsurance, the majority for event cancellation and the remaining for business interruption and other claims.

In January, Britain’s Supreme Court ruled in favour of claimants in disputed business interruption insurance cases involving many insurers. The decision was the culmination of an industry test case, which was brought by the Financial Conduct Authority after insurers denied claims from thousands of business customers who suffered financial losses after being forced to close down during Covid-19 lockdowns.

Eight insurers, including Hiscox and fellow Bermudian re/insurer Arch Capital, agreed to take part in the test case proceedings, which were subject to a judgment by the High Court of England and Wales last year.

In a statement accompanying Hiscox’s full year report, Mr Masojada, referring to the disputes, said: “Unsatisfactorily for both our policyholders and ourselves, there was disagreement over whether the Hiscox policy wordings responded to the steps taken by the UK government to manage Covid-19.

“Our claims paying philosophy is deep-rooted: to pay claims quickly, fairly and in line with the intention of the policy. The underwriting intention of these property policies is to respond to local events affecting a firm's premises and not to nationwide steps taken to manage the pandemic.

“When a claims decision is challenged it is the wording which determines the coverage in law, and there was room to question whether the Hiscox wording reflected this underwriting intent. We, of course, regret the impact of this disagreement on affected policyholders, and the adverse publicity we received as a result of it has been difficult for all of our stakeholders.”

Mr Masojada said the Supreme Court judgment confirmed that “except in rare circumstances, cover is restricted to Hiscox policyholders who were mandatorily closed. Approximately one third of Hiscox's 34,000 UK business interruption policies may respond as a result”.

He said Hiscox has begun paying claims in line with the judgment.

“We clearly regret the uncertainty and anguish that the dispute has caused to our customers, so it is important that we learn from this experience. The most important lesson is the need for clarity in wordings, to ensure intent is properly reflected in the policy detail,” Mr Masojada said.

“Hiscox has undoubtedly suffered some brand damage this year. While I was reassured that net customer numbers in the UK remained stable in 2020, the route to restoring our brand is the same one which created it; providing flexible insurance cover to meet each customer's needs, paying each claim fairly and quickly, and doing this all with good customer service. Our reputation was built one risk, one claim, and one customer at a time, and with that same focus, in time, the brand will strengthen.”