Insurers Quizzed By MPs Over Paying COVID-19 Claims

By Lucia Osborne-Crowley
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Law360, London (March 27, 2020, 12:31 PM GMT) -- British insurers told lawmakers Friday that the industry cannot afford to pay out on all claims during the COVID-19 crisis, but said they are doing everything they can to support consumers during the pandemic.

The Association of British Insurers said in response to a letter from the parliamentary Treasury Committee that it will compile data on how insurers plan to approach coronavirus claims and will submit the data to lawmakers.

"We are addressing the questions raised, and will be responding to the committee," a spokesperson for the association said.

The committee wrote to the ABI on Thursday seeking details about how insurers are responding to the crisis. Politicians want to know how many companies have stopped offering some products during the crisis or changed their terms.

The ABI said its efforts so far include record payouts for travel claims over canceled holiday and travel plans as well as waiving some requirements for drivers. But the group warned lawmakers that it would not be able to pay out on all claims connected to the coronavirus outbreak.

"This is an unprecedented challenge and no country in the world offers extensive pandemic insurance to business," the spokesperson said.

The body added that most insurers would not be able to afford to offer full pandemic coverage. It said the government should work with insurers to respond to the global crisis.

Insurers are doing everything they can to support consumers during the outbreak, which has infected more than 500,000 people worldwide and more than 11,000 in Britain, the association said.

"The insurance industry recognizes this is a very difficult and worrying time," the spokesperson said. "Insurers are doing all they can to help and support customers."

The Treasury Committee also said in its letter to the ABI that it has asked members of the association to estimate how much they expect to pay out in coronavirus-related claims. Insurers should also provide details of how they plan to approach business interruption policies as the outbreak spreads, lawmakers said.

Insurers should also give the committee details of how they are communicating with consumers about the insurance implications of COVID-19

Insurers including Admiral, Aviva and Liverpool Victoria have scaled back their travel insurance or simply stopped selling policies since the outbreak started.

The ABI said Tuesday that travel insurers in Britain could be hit with a bill of at least £275 million ($336 million) in claims over the crisis, the highest pay-out on record for passenger flight cancellations.

Britain's Financial Conduct Authority wrote to insurers on Thursday urging them to show fairness and flexibility when assessing claims related to the coronavirus.

--Editing by Ed Harris.

For a reprint of this article, please contact reprints@law360.com.

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