July 24, 2021

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Insurers expect to pay £2.5bn for Covid related claims

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LONDON: Up to £2.5 billion-worth of payments could be made for coronavirus-related insurance claims during 2020, the Association of British Insurers (ABI) estimates.

The ABI said its members could pay around £2 billion for Covid-19 business interruption claims. A further £204 million may be paid from Covid-19 related protection insurance claims, including life, critical illness, and income protection insurance claims.

And £152 million is expected to be paid on travel insurance claims. Some £121 million could be paid across other general insurance products, including events, weddings, and liability insurance. The ABI, whose figures cover its members, said overall UK Covid-19 insurance claims are estimated at around £3 billion.

Huw Evans, the ABI’s director general, 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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