The impossible choices facing insurers amid the coronavirus crisis


It seems like there are no good choices for insurers these days. The industry is taking a lot of flak over refusal to pay for pandemic-related business interruption claims.

As so often in times of crisis, people look for a scapegoat. The idea of the greedy, faceless insurer profiting while their small business customers go to the wall fits the popular narrative, but does not give the full picture.

The scale and depth of the economic impact could have posed an existential threat to some insurers and, as the industry has pointed out, insurance exists to indemnify policyholders against every day risks, not cataclysmic, once-in-a-generation events.

Not that semantics will provide much comfort to firms paying thousands each year for business interruption policies that have not come through when needed.

Gestures such as Admiral’s £25 premium refund to motor customers following lower claims frequency will be welcomed and makes for good headlines, but should insurers report a profitable year, either through reduced exposure to the virus fallout or prudent planning, questions will be asked.

Just as banks came under intense scrutiny and opprobrium after the 2008 financial crisis, if insurers are not seen to be sharing the pain felt by so many, the knives will surely be out.