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The Association of British Insurers said on Saturday its members will pay about £2.5 billion ($3.5 billion) in COVID-19-related claims for losses in 2020, with business interruption losses costing £2 billion.
The updated loss figures were collected from the trade association’s members in mid-to-late January, which was shortly after the country’s high court ruled for policyholders in a test case over nondamaged business interruption claims.
The ABI said that in addition to the losses its members face, Lloyd’s of London previously estimated it faced £500 million in U.K. COVID-19 claims in 2020, taking the overall U.K. pandemic insurance claim estimate to £3bn for the year.
On top of the £2 billion in business interruption claims, the latest ABI estimate includes £204 million for life, critical illness and income protection claims, £152 million for travel insurance claims and £121 million across various general insurance products, including events, weddings and liability.
The ABI said 123,000 claims have been settled across all lines and a further 9,000 policyholders had received partial payments as of mid-January.
The ABI’s director general, Huw Evans, said in a statement: “The COVID-19 pandemic is unprecedented in its impact and will be one of the biggest insured events of recent times.”
He added that the ABI recognizes that the pandemic has highlighted some “uncomfortable gaps” between expected coverage and what policies were designed for.
“We need to learn lessons from this unprecedented event and redouble our efforts to improve consumers’ trust in insurance products,” said Mr. Evans.
Commercial Risk Europe is a sister publication of Business Insurance. More stories from CRE here.