Travel insurers expect to pay out record £275m for coronavirus-related claims
An estimated £275m ($319m) will be paid out by UK travel insurers for claims made in relation to the coronavirus pandemic, according to industry calculations.
This is the expected total as payouts continue over the coming weeks and months, with the vast majority of payouts being for cancellations, according to The Association of British Insurers (ABI), which made the calculation.
Approximately 400,000 coronavirus claims are expected, the highest number on record. This is compared to 294,000 cancellation and disruption claims received in the whole of 2010, which previously saw the most annual claims.
In 2010 £148m was paid out for all claims, the highest annual figure for cancellation payouts previously seen by the industry.
This included £62m worth of payments made for cancellation and disruption following the Icelandic volcanic ash cloud which caused travel chaos in that year.
Some coronavirus-related payments will be for disruption costs incurred abroad, the ABI said.
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.
“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 pledged to make sure additional support is available for customers, including having in place contingency plans to deal with valid claims as quickly as possible.
Many travel insurers have recently stopped selling cover to new customers completely, or placed restrictions connected to the coronavirus on new policies.
The ABI said that this is because 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.