Aviva Faces £200M In Biz Interruption Claims From Lockdown

By Martin Croucher
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Law360, London (May 21, 2020, 3:03 PM BST) -- Aviva said Thursday it expects to be hit with a £200 million ($244.6 million) bill from business interruption claims as a result of a U.K.-wide closure of nonessential companies during the coronavirus pandemic.

The U.K.-based insurer said however that the majority of its business policies did not offer protection from COVID-19-related losses.

The announcement comes the day after it was targeted for litigation for nonpayment of business interruption claims, alongside insurer QBE, by a group of hospitality businesses coordinated by Mishcon de Reya LLP.  

"The vast majority of our commercial policies do not cover business interruption claims arising from COVID-19," Aviva said in its first quarter results.

"However, we anticipate potential areas of exposure in certain specialist schemes and broker programs, and we have paid claims in the U.K. and Canada where coverage exists," it added.

The insurer also said it would "work constructively" with the Financial Conduct Authority in order to achieve clarity over the scope of its liabilities.

The regulator is preparing to take a handful of representative policy wordings to the High Court in July to get a judgment over whether insurers are required to pay out claims.

Aviva said it also had to pay claims on travel insurance, as well as surety and other types of commercial cover. It does not write event cancellation or trade credit insurance.

It said though the losses would be offset by "favourable impacts" in other policy lines, leading to a total loss to the business of £160 million.

Insurtech company By Miles estimates that U.K. insurers stand to make £1 billion from reduced motor claims as a result of fewer cars on the road during the lockdown, which began late March.

Some insurers like Admiral and LV have already started offering premium rebates to customers, but Aviva said it had not done so. The FCA said last week that insurers should consider refunding premiums to customers who have been unable to use their cars during the lockdown.

--Editing by Rebecca Flanagan.

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

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