UK travel insurers expect to pay record claims of at least £275 million (US$319 million) due to the coronavirus pandemic, according to first estimates from the Association of British Insurers (ABI).
The vast majority of payouts will be for cancellations, which is expected to be at least twice as much for cancellation than for the whole of 2019, and are set to be the highest cancellation claims on record.
The ABI figures also show:
- The vast majority of coronavirus claims will be for cancellations, which is more than the highest annual figure for cancellation payouts of £148 million (US$172 million) paid in 2010.
- Approximately 400,000 coronavirus claims are expected, compared to the 294,000 cancellation and disruption claims received in the whole of 2010, the previous highest year on record for such claims.
- The coronavirus claims dwarf the £62 million (US$72 million) cancellation and disruption payments following the Icelandic volcanic ash cloud in 2010.
ABI travel insurance members have agreed to a series of travel insurance pledges to ensure extra support for customers, including having in place contingency plans to deal with valid claims as quickly as possible.
In a message last week about potential business interruption claims during the coronavirus crisis, the ABI said, “the vast majority” of businesses will not have purchased policies that compensate them for such forced closure. “Standard business interruption cover – the type the majority of businesses purchase – does not include forced closure by authorities as it is intended to respond to physical damage at the property which results in the business being unable to continue to trade,” the ABI noted.
UK Prime Minister Boris Johnson, on Monday, March 23, ordered police to enforce a strict lockdown in the country, banning non-essential travel and closing non-essential shops. Public gatherings of more than two people are banned, unless they live together; shopping is limited to essential supplies such as food or medicine; exercise can be taken, alone, once a day; and travel to work is allowed if absolutely necessary.
Source: Association of British Insurers
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