The British insurance industry is bolstering the UK economy with a massive £2.5bn claims payout – including £204m in protection claims – while the country gets to grips with the Covid-19 pandemic.
Figures released by the Association of British Insurers (ABI) show that in 2020 the sector will have paid out:
- £2bn for Covid-19 business interruption claims
- £204m paid from Covid-19 related protection insurance claims, including life, critical illness, and income protection insurance claims
- £152m expected to be paid on travel insurance claims
- £121m expected to be paid across other general insurance products, including events, weddings, and liability insurance
In addition, 123,000 claims have been settled with payment across all of the above business lines, while a further 9,000 have received partial payments as of mid-January 2021.
Over two-thirds of a billion pounds (£697m) had been paid out for these claims as of mid-January 2021.
The figures stand separate to a previous estimation from the Lloyd’s market of £500m, taking the current overall estimate up to £3bn for UK Covid insurance claims.
Huw Evans, the ABI’s Director General, said the Covid-19 pandemic is “unprecedented in its impact” and will be “one of the biggest insured events of recent times”.
He said: “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-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 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.”
Craig Paterson, chief underwriter at one of Britain’s biggest insurers, Royal London, said that despite 2020 being an unpredictable year, the firm continued to pay claims promptly and support our customers through Covid-19.
He said: The pandemic has shown the importance of having protection and while receiving a pay-out can help to ease the financial strain of bereavement or illness, money can’t always ease the emotional strain. Royal London protection policies bought through a financial adviser come with a Helping Hand service which provides customers and their families with access to a dedicated nurse who is able to give tailored and personal support to get them through a difficult time.”