Hiscox yesterday spoke out about its potential claims exposure to Covid-19 after some customers threatened legal action over the insurer’s refusal to pay business interruption claims. The Sunday Times reported last weekend that a group of businesses led by film company Media Zoo allege that Hiscox is trying to avoid paying out for what they believe are legitimate claims and plan to take the matter to court.They say they bought policies covering damages caused by “an occurrence of any human infection or ... contagious disease”, provided a local authority was notified of an outbreak.Mark Killick, Media Zoo’s creative director, told Insurance Business: “Our Hiscox business interruption insurance specifically covers office closure because of notifiable diseases like Covid-19 but our insurer is refusing to pay.”Media Zoo said its claim was triggered by its “inability to use the insured premise due to restrictions imposed by a public authority” after “an occurrence of a human infection or human contagion disease”.The company stated that Bermudian-based Hiscox told them that the denial of access cover only applies when there is an incident within a one-mile radius. In addition, the insurer’s claims team said the public authority cover is only triggered following certain specific occurrences.Yesterday, Hiscox stated: “Hiscox’s 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.“In determining any response to claims or complaints Hiscox reviews every case individually.”The insurer added that it had published “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”.Hiscox is proactively paying claims for these lines of business, the company added, and the claims are progressing “in line with its expectations”.Hiscox said that “in light of recent market speculation” it would set out additional details on its business interruption exposure.“Hiscox UK provides business interruption cover to SMEs as part of its small commercial package policies,” Hiscox said. “Approximately 10 per cent 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 per cent of these customers have monthly revenues of less than £40,000 ($50,120) in a normal trading environment, with a significant proportion below £10,000 per month. The level of economic loss experienced by these businesses is likely to be materially lower than revenues in a normal trading environment.“Hiscox believes its business interruption exposure to Covid-19 is limited in Europe and it has negligible exposure in its US retail business.“Hiscox Retail has substantial reinsurance cover in place.Hiscox added that it plans to provide a further update to the market clarifying its potential exposures within the next week after completion of ongoing analysis.