The ABI’s director general believes the industry needs ‘to learn lessons from this unprecedented event’
Trade association the ABI expects its insurer members to pay up to £2.5bn for Covid-19-related claims incurred in 2020.
The majority of this estimate covers coronavirus-linked business interruption (BI) claims, which the ABI predicts will cost insurer members £2bn in total.
Furthermore, the trade association calculated that travel claims from last year will cost insurers around £152m, while pay outs for other general insurance products, such as events, weddings and liability insurances, will total £121m.
Covid-19-related protection claims in 2020, including life, critical illness and income protection, is expected to set insurers back £204m.
Of the pandemic-related claims made last year, the ABI said that 123,000 have been settled with a payment across all of the aforementioned business lines, while a further 9,000 have received partial payments as of mid-January 2021.
As of mid-January this year, £697m has been paid out by insurer members for these claims.
Lloyd’s of London, on the other hand, estimated that UK Covid-19-linked claims last year amounted to £500m – added to the ABI’s numbers, this gives an overall figure of £3bn for UK insurance claims made in 2020 related to the pandemic.
For Huw Evans, the ABI’s director general, the insurance industry needs “to learn lessons from this unprecedented event” moving forward.
He 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 [to] 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 [and] 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.”