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The Association of British Insurers (ABI) has estimated a payout of at least £275mby travel insurance sector due to the impact of the novel coronavirus (Covid-19) outbreak on the travel industry.
ABI further stated that the majority of payouts in coronavirus related claims will be for cancellations, while some of them will be for disruption costs incurred overseas.
The estimated payouts for cancellation swill be twice the cancellation payouts made for the whole of last year. It is also expected to become the highest annual figure for cancellation payouts, surpassing the figure of £148m paid in 2010.
ABI assistant director and head of General Insurance PolicyMark Shepherd said: “At this unprecedented time, travel insurers are helping soften the financial blow for thousands of customers whose travel plans have been canceled or disrupted by Coronavirus.
“Along with compensation from sources, such as airlines and credit card providers, travel insurers are helping customers get through these tough times.”
The trade association expects travel insurers to see more than 400,000 coronavirus claims, compared to the 294,000 cancellation and disruption claims received in 2010, which is the highest year on record for such claims.
Furthermore, the ABI noted that coronavirus payouts will be much higher than the £62m cancellation and disruption payments that were made following the Icelandic volcanic ash cloud in 2010.
The members of the association have agreed a series of travel insurance pledges to offer additional support for customers.
This includes the contingency plans to deal with valid claims as quickly as possible.
Meanwhile, many countries including India, Italy, and UK have implemented lockdown and travel bans in a bid to contain the spread of coronavirus.