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Shares of British insurance company Hiscox Ltd (LON: HSX) edged 3.55% higher after the Association of British Insurers said that it welcomes the UK Supreme Court decision favouring British businesses' compensation for COVID-19 related losses.
Hiscox issued a statement welcoming the clarity of the final decision and said that fewer than a third of its 34,000 UK business interruption policies might respond as a result. The company added that its 2020 estimate for business interruption rose by $48 million net of reinsurance.
The insurer had argued that business interruption insurance policies did not cover losses brought about by the coronavirus lockdown measures. Still, the Supreme Court ruled that businesses with such insurance should be compensated.
The Association of British Insurers said that the compensation process had started in some cases. The ruling would significantly boost UK businesses ravaged by the coronavirus pandemic and the resulting lockdowns.
In a classic case of sell the rumour, buy the news, Hiscox shares rallied higher despite the ruling, which forces the company to compensate business insured against business interruptions.
“The judgment should be a massive boost to all businesses reeling from a third lockdown who can now demand their claims are paid,” said Richard Leedham, a partner at law firm Mishcon de Reya who represents the Hiscox Action Group.
“The hope and expectation of our clients is that the claim adjustment process starts immediately and that insurers will not continue to cause further distress by further unnecessary delay.”
Hiscox share price
Hiscox shares rose 3.55% to trade at 1000.8p having rallied from Friday’s closing price of 966.6p.
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