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Law360, London (June 28, 2021, 1:02 PM BST ) Hiscox Ltd. said on Monday that it has agreed to a settlement with a policyholders' group representing companies that were forced to close during national lockdowns ordered by the government during the pandemic.
The insurer and the group of policyholders, the Hiscox Action Group, have been locked in an arbitration dispute over payouts on claims for business interruption insurance since December.
"Proceedings have now been resolved to the mutual satisfaction of all parties," Hiscox and the action group said in a joint statement, without revealing the size of the agreement. "The parties have agreed that the terms of the settlement are confidential."
The group of 386 businesses and Hiscox declined to comment on the settlement and what the arbitration dispute involved.
The private arbitration was launched alongside a legal test case brought against eight insurers by the Financial Conduct Authority on behalf of 370,000 holders of business interruption policies.
The U.K. Supreme Court ruled in favor of the policyholders in January, saying that insurers have to pay out under the policies to companies forced to close by government lockdowns — in most circumstances.
In a joint statement on Monday, the action group and Hiscox — which were both involved in the FCA case — said the arbitration was to "determine matters between the parties not resolved by the test case."
Mishcon de Reya LLP, which represented the action group, said in a statement in February that there was "real tension" between insurers and policyholders even after the Supreme Court ruling over how the closure of a company's premises affected their business activities and whether they can claim.
The City watchdog said this month that insurers have paid out £757 million ($1.1 billion) in claims for interrupted business since the Supreme Court judgment.
According to the figures, just over 20,300 of 37,700 policyholders, or 54%, who have had their claims accepted by their insurer had been handed a full or interim payment.
--Editing by Joe Millis.
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