Initial estimates from the Association of British Insurers (ABI) indicate that its members expect to pay out over £1.2 billion in claims to support businesses and individuals affected by COVID-19.
This estimate includes payments for business interruption, travel insurance, weddings policies and cancelled school trips, but does not include claims made through Lloyd’s and the London Market.
Of the £1.2 billion working estimate, £900 million relates to business interruption claims, £275 million paid to customers in cancellation claims on travel insurance, and £25 million across wedding insurance, school trips and events.
This is in addition to the estimated £363 million that will be paid to customers following Storms Ciara and Dennis earlier this year.
The ABI stressed that only a small number of businesses have policies that could provide coverage against COVID-19, meaning insurers have not been building up the reserves necessary to cover these claims.
Nevertheless, only 4% of insurance products were withdrawn in March 2020, and the ABI believes all its members are being flexible in their payments and support for customers.
“This is an unprecedented event, and insurers recognise that it is a very worrying time for everyone,” said Huw Evans, ABI’s Director General.” While many business owners are uninsured for pandemics, UK insurers still expect to pay over £1.2 billion in claims, making this a significant insured event.”
“From paying all valid claims, to providing a range of extra help and support to customers, insurers are working hard to reassure and support policyholders through this uncertain period,” he continued.
“However, we are also painfully aware that the majority of businesses are uninsured for global pandemics, as is the case throughout continental Europe and North America. Although ABI members expect to pay £900 million in business interruption claims, most policyholders are not covered for pandemic losses.”
“We agree strongly that the UK should examine public-private partnerships to find a lasting solution, to enable more affordable, more extensive pandemic insurance cover to be available to those firms who want it”
