Members of the Association of British Insurers (ABI) expect to pay up to £2.5 billion for COVID-19 insurance claims incurred in 2020, according to new data.
The majority of this figure (£2 billion) stems from business interruption claims, while another £204 million is attributed to protection insurance claims, including life, critical illness, and income protection insurance claims.
ABI further estimates that £152 million will be spent on travel insurance claims and £121 million will be paid across other general insurance products, including events, weddings, and liability insurance.
Of these claims, 123,000 claims have been settled with payment across all of the above business lines and a further 9,000 have received partial payments as of mid-January 2021.
Over two-thirds of a billion pounds (£697 million) had been paid out for these claims as of mid-January 2021.
In addition, Lloyd’s previously estimated a £500 million cost of UK Covid claims, taking the current overall estimate up to £3 billion for UK COVID insurance claims.
“The Covid-19 pandemic is unprecedented in its impact and will be one of the biggest insured events of recent times,” said Huw Evans, the ABI’s Director General.
“These latest estimates demonstrate the range of support ABI members expect to offer their customers as a result of Covid-19 related claims across a wide range of insurance policies. This data was collected from individual firms by the ABI in mid-late January, and millions of pounds continue to be paid out every week in claims settlements.”
“The industry response also includes vital support to families who have lost a loved one to Covid who are receiving life insurance payments,” Evans continued.
“However, we recognise the pandemic has also illustrated some uncomfortable gaps between what people expected to be covered for and what their policy was designed for. We need to learn lessons from this unprecedented event and redouble our efforts to improve consumers’ trust in insurance products.”