The Association of British Insurers (ABI) estimates that its member firms may have to pay out businesses and individuals more than £1.2bn in claims related to Covid-19.
The figure quoted by ABI comprises payments on the interruption of businesses, wedding policies, travel insurance, and scrapped school trips, all caused by the diseases that originated in China in December last year.
The initial estimate is part of the association’s response to the Treasury Select Committee, which outlines how insurance companies continue to help their clients during this global health crisis.
The ABI noted that this figure is a working estimate and that data is collected to provide as much complete picture as possible at this stage.
The figure does not include claims made via Lloyd’s and the London Market which will be required to give a total figure for the UK market response, the association added.
Out of the £1.2bn working estimate given by the ABI, £900m relates to business interruption claims.
A total of £275m is expected to be paid to customers in cancellation claims on travel insurance. British insurer will pay out £25m for claims related to wedding insurance, school trips, and events.
“This is in addition to the estimated £363m that will be paid to customers following Storms Ciara and Dennis earlier this year,” the association said in its statement.
ABI director general Huw Evans said: “This is an unprecedented event, and insurers recognise that it is a very worrying time for everyone. While many business owners are uninsured for pandemics, UK insurers still expect to pay over £1.2bn in claims, making this a significant insured event.
“From paying all valid claims, to providing a range of extra help and support to customers, insurers are working hard to reassure and support policyholders through this uncertain period.”