Law360 is providing free access to its coronavirus coverage to make sure all members of the legal community have accurate information in this time of uncertainty and change. Use the form below to sign up for any of our weekly newsletters. Signing up for any of our section newsletters will opt you in to the weekly Coronavirus briefing.
Sign up for our Insurance UK newsletter
You must correct or enter the following before you can sign up:
Thank You!
Law360, London (April 27, 2020, 12:44 PM BST) -- British insurers have estimated they will pay out approximately £1.2 billion ($1.5 billion) to support businesses hit hard by the COVID-19 outbreak, as the pandemic was described as a "significant insured event."
The Association of British Insurers, a trade body representing the sector, told the parliamentary Treasury Committee on Saturday that the £1.2 billion bill to be picked up by its members will cover claims for interrupted business, travel insurance, weddings policies and canceled school trips.
"While many business owners are uninsured for pandemics, U.K. insurers still expect to pay over £1.2 billion in claims," Huw Evans, director general of the association, said
Evans added that the figure makes the pandemic a "significant insured event."
The ABI submitted the estimate to the Treasury Committee in response to a letter from committee chairman Mel Stride on Saturday. Stride wanted details about how the insurance sector is responding to the coronavirus outbreak, which has killed at least 200,000 people worldwide
An estimated £900 million will go toward paying out business interruption claims, the ABI said. British lawmakers raised concerns in March about whether standard policies would cover pandemic-related losses.
The second-largest chunk of the £1.2 billion payout — £275 million — will go to travel insurance customers to cover trips that were canceled due to coronavirus travel restrictions. A further £25 million will be paid out to consumers for wedding insurance as well as canceled school trips and other events hit by disruption.
The ABI noted that the £1.2 billion will be handed out in addition to the estimated £363 million that will be paid to customers following storms Ciara and Dennis — catastrophic storms that hit northern parts of the U.K. earlier this year. It added that these amounts are a working estimate and do not yet include figures from Lloyd's of London or the London market.
The body also told the committee that insurers are handling a massive surge in inquiries amid the COVID-19 chaos, with some insurers reporting a 200% rise in the volume of inquiries to their call centers.
The submission also stressed that insurers have given "pledges" to support consumers during the pandemic in connection with flexible coverage for working from home.
They have also offered extended car insurance policies to National Health Service volunteers, and travel insurers have extended policies for customers who are stuck abroad.
But the submission reiterated that no country has been able to provide extensive pandemic coverage. Significant government involvement is needed to tackle the problem.
"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," Evans said. "We agree strongly that the U.K. should examine public-private partnerships to find a lasting solution."
Insurers across Britain and Europe are under pressure to clarify their positions on pandemic insurance as the crisis has deepened.
British lawmakers quizzed insurers on their COVID-19 response in March, and the Central Bank of Ireland stepped in to instruct Irish insurers to prioritize customers' best interests when assessing claims.
--Additional reporting by Martin Croucher. Editing by Ed Harris.
For a reprint of this article, please contact reprints@law360.com.
