Members of the Association of British Insurers (ABI) expect to pay up to £2.5 billion for Covid-19 insurance claims incurred in 2020.
The ABI’s latest estimates show insurers will pay £2 billion for Covid-19 business interruption claims, while £204 million will be required to cover related protection insurance claims, including life, critical illness, and income protection.
Insurers will pay out another £152 million on travel insurance claims and £121 million is expected to be paid across other general insurance products, including events, weddings, and liability insurance.
So far, the ABI estimates that 123,000 claims have been settled with payment across all of these business lines, with a further 9,000 receiving partial payments as of mid-January 2021.
This means £697 million had been paid out for these claims by the middle of last month.
Huw Evans, director general of the ABI, commented: “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.”
Evans pointed out that the ABI’s data was collected from individual firms in mid-late January, “and millions of pounds continue to be paid out every week in claims settlements”.
He continued: “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.”