UK insurers' COVID-19 payouts set to top £1.2bn excluding Lloyd’s and London Market: ABI

The Association of British Insurers (ABI) has estimated that its members will payout over £1.2 billion in claims to support businesses and individuals affected by the COVID-19 pandemic.

The estimate excludes claims made through Lloyd’s and the London Market.

Of the £1.2 billion working estimate, £900 million relates to business interruption claims, a record £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.

ABI highlighted that only a small number of businesses have policies that could provide coverage against COVID-19. It noted that insurers have not been collecting premiums and therefore building up reserves, that enables them to pay claims.

Insurers are offering policy extensions, waiving restrictions and supporting customers across the full range of insurance products.

Only 4 percent of products were withdrawn in March 2020, and all members who responded are being flexible to make payments and support or advise customers as much as possible, the association noted.

“This is an unprecedented event, and insurers recognise that it is a very worrying time for everyone. 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," said Huw Evans, ABI’s director general. "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 added: “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.”