Insurance industries across the globe are witnessing an unprecedented surge in the travel related claims since the outbreak of the pandemic. Credit: Fran Boloni on Unsplash.

The Association of British Insurers (ABI) has said that the travel insurers in the UK could face a record-breaking estimate of at least £275m in claims over the coronavirus (Covid-19) outbreak.

This could be the highest pay-out for passenger flight cancellations, till date.

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Apart from travel insurance, a majority of the claims could be related to cancellations of events, school trips, and business disruptions.

ABI noted that these figures surpass the 62 million-worth of payments made for cancellation and disruption following the Eyjafjallajökull volcanic eruption in Iceland last year.

At the time, the cancellation claims stood at £148m due to flight disruptions following the formation of a vast ash cloud.

Approximately 400,000 claims solely in relation to the pandemic event are expected in the first quarter of this year.

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Insurance industries across the globe are witnessing an unprecedented surge in travel related claims since the outbreak of the pandemic.

Most of them have been under fire for not providing cover for infectious diseases and those that do usually exclude unknown viruses like Covid-19.

The situation has also led insurers to withhold product lines such as travel insurance and income protection.

ABI stated that providing widespread insurance cover against pandemics would be virtually impossible without state support as the amount of capital insurers would have to hold against the risk would cause completely unaffordable prices for customers.

The association has urged the authorities for a new solution to better secure the economy against pandemics.