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Law360, London (April 20, 2020, 2:28 PM BST) -- Insurers are charging businesses more for cover while stripping back any mention of infectious diseases from policy wordings, according to research published on Monday, as the sector seeks to minimize its exposure to the growing pandemic crisis.
Insurance consultancy Mactavish said it has found that at least five commercial insurers had removed cover from common business lines, while also increasing premiums.
The move comes amid mounting criticism of insurers, many of which have issued refusals on claims on business interruption insurance.
Approximately 500,000 businesses had renewed their insurance from late March to early April, Mactavish said. But many had seen cover reduced in areas such as directors' and officers' liability and professional indemnity.
"Over the past few weeks, businesses up and down the country would have received insurance offers and accepted them, but at the last minute, just days or even hours before renewal, elements of their cover were removed," Bruce Hepburn, chief executive of Mactavish, said.
There have already been changes to consumer policies such as travel insurance, which insurers amended early on to exclude liability for disruption linked to the coronavirus crisis or simply stopped selling.
Broker Willis Re said earlier this month that reinsurers had introduced exclusions over coronavirus in the run up to the April 1 renewal date, a measure that was "by no means universally accepted" by insurers.
Hepburn said that, although cover is being stripped back, insurers have also hiked premiums for their policies, which also meant increased commission for brokers.
"We have customers getting less cover and paying more for this, whilst insurers and brokers are seeing their financial rewards increase," he said. "It doesn't feel like insurers and brokers are sharing the pain of businesses across the U.K."
The Association of British Insurers expects insurers to pay out more than £1 billion in claims over coronavirus, and rejects accusations that the sector is "weaseling out" of properly compensating businesses.
Hiscox Insurance, which has come under increasing criticism for refusal to pay business interruption claims from companies facing financial ruin from the nationwide lockdown, said last week that pandemic losses were "simply too large and too systemic for private insurers to cover."
--Editing by Ed Harris.
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