UK insurers face up to £3bn for COVID-19 claims incurred in 2020, says ABI
The Association of British Insurers (ABI) has estimated that its members are expected to pay up to £2.5 billion for COVID-19 insurance claims incurred in 2020.
In addition, Lloyd’s previously estimated a £500 million cost of UK COVID-19 claims, taking the current overall estimate up to £3 billion for UK COVID-19 insurance claims.
ABI said the majority of these claims (£2 billion) come from losses related to business interruption.
The remaining include £204 million paid from COVID-19 related protection insurance claims, including life, critical illness, and income protection insurance claims; £152 million expected to be paid on travel insurance claims; and £121 million expected to be paid across other general insurance products, including events, weddings, and liability insurance.
According to the association, 123,000 of these claims have been settled with payment across all of the business lines; 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.
Huw Evans, director general of ABI, said: “The COVID-19 pandemic is unprecedented in its impact and will be one of the biggest insured events of recent times. 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.
“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.”
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