Travel insurers expect to make record £275m coronavirus-related payouts
Record insurance payouts totalling at least £275 million will be made to travellers due to the coronavirus crisis, according to industry estimates.
The Association of British Insurers (ABI), which made the calculation, said this is the expected total as payouts continue in the coming weeks and months.
It means coronavirus-related payouts will dwarf the £62 million-worth of payments made for cancellation and disruption following the Icelandic volcanic ash cloud in 2010.
The vast majority of coronavirus payouts will be for cancellations, the ABI said.
It said the expected total will easily surpass the highest annual figure for cancellation payouts it has seen previously – £148 million paid in 2010 for all claims, including those related to the volcano.
Some payments will be for disruption costs incurred overseas.
Around 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.
Mark Shepherd, the ABI’s assistant director and head of general insurance policy, said: “At this unprecedented time, travel insurers are helping soften the financial blow for thousands of customers whose travel plans have been cancelled or disrupted by coronavirus.
In light of the Foreign Secretary’s announcement advising against all but essential travel for 30 days, we have issued this statement 👇 The announcement will provide welcome relief for customers during these uncertain times. pic.twitter.com/gPUeJeWpER
— ABI (@BritishInsurers) March 17, 2020
“Along with compensation from sources, such as airlines and credit card providers, travel insurers are helping customers get through these tough times.”
ABI travel insurance members have agreed a series of pledges to ensure extra support for customers, including having in place contingency plans to deal with valid claims as quickly as possible.
More information about the pledges can be found at www.abi.org.uk/products-and-issues/topics-and-issues/coronavirus-qa/.
Many travel insurers have recently paused the sale of cover to new customers altogether, or placed restrictions related to coronavirus on new policies.
The ABI said that insurance is based on assessing the possibility of an event occurring. Insurers take account of when any risk becomes more of a probability than a possibility and then make commercial decisions.