By Sinead Cruise and Carolyn Cohn
LONDON (Reuters) – Lloyd’s of London insurers Hiscox and Beazley expect to pay up to $345 million between them to settle claims for cancelled travel, events and mass gatherings during the coronavirus crisis, they said on Wednesday.
Hiscox said it expected to pay up to $175 million to settle claims if disruption from the COVID-19 pandemic that has put billions of people on lockdown lasts more than six months.
That sum would reduce to up to $150 million if the disruption lasted six months or less.
Beazley, meanwhile, said it faces $170 million of losses, net of reinsurance.
The two insurers are among Lloyd’s of London’s biggest syndicate members and were responding to the market’s request for all members to submit estimates of their COVID-19 exposure, which it will publish early next month.
Both insurers also said they had received applications from small companies looking to claim on their business interruption policies but that most of these policies did not provide appropriate cover for measures taken in response to a global pandemic.
Hiscox said a number of UK policyholders had disputed their lack of cover and it would look to work with the industry, regulators and customers to “seek means of expediting resolution through range of independent mechanisms”.
“Hiscox recognises these are extremely difficult times for businesses and is determined to help provide greatercertainty for customers,” it said in a statement.
Beazley, meanwhile, said it would respond quickly to claims from bespoke policyholders who had some degree of pandemic protection.
Britain’s markets watchdog has said that most policies bought by smaller UK companies do not cover business disruption caused by the pandemic.
Two groups of small businesses are threatening legal action against Hiscox over unpaid claims.
KBW analysts said the size of Hiscox’s potential losses related to business interruption in Britain was unclear, reiterating their “perform” ratings on the two stocks.
Beazley, which also reported a $55 million investment loss in the first quarter because of this year’s sell-off in financial markets, said it had been communicating with brokers on possible changes to its risk appetite.
Beazley shares fell 3.4% to 353.8 pence by 0844 GMT, one of the worst performers in the FTSE mid-cap index. Hiscox shares were up 2% to 814.2 pence.
(Additional reporting by Muvija M in Bangalore; Editing by Maiya Keidan and David Goodman)