UK insurance companies expect to pay over £1.2bn in support for businesses and individuals affected by the COVID-19 crisis, the Association of British Insurers (ABI) has revealed.
These payments by ABI members cover claims for business interruption, travel insurance, wedding policies and cancelled school trips, but not those made through Lloyd’s of London.
Of the £1.2bn working estimate, £900m relates to business interruption claims, a record £275m for travel cancellations, and £25m across wedding insurance, school trips and events.
The ABI said that insurers are managing an unprecedented level of activity due to coronavirus, with some reporting a 200% rise in enquires at their call centres.
However, in response to a data request from the Treasury select committee, the association warned that “no country in the world” is currently able to provide widespread pandemic insurance.
“This is an unprecedented event, and insurers recognise that it is a very worrying time for everyone," said ABI director general Huw Evans.
“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 £900m in business interruption claims, most policyholders are not covered for pandemic losses.”
These anticipated COVID-19 payments come in addition to the estimated £363m that insurers will pay to customers following Storms Ciara and Dennis earlier this year.
The ABI said that whether cover for pandemics can be provided through an insurance model is an “important debate”, but that significant state involvement would be required.
It also revealed that just 4% of insurance products were withdrawn in March 2020, and that ABI members are being flexible to make payments and support or advise customers as much as possible.
“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,” Evans said.
“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.”
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