Covid-19: Government addresses nation on pandemic BI cover

Government says insurers will cover pandemic but ABI insists this changes very little as most do not have this type of cover.

Insurers will payout to firms for business interruption (BI) if they have pandemic cover and have been compelled to close due to government guidelines.

Where the insurance would have kicked in if the government mandated closures it will now become active in response to the current guidelines

Insurers have faced criticism, as has the government, after the Prime Minister Boris Johnson only recommended, instead of ordering, businesses close to help people avoid social contact amid the spread of the coronavirus.

Some were concerned that BI would only kick in if the government mandated the order to close.

The measure is part of a £330bn package announced by Chancellor Rishi Sunak designed to support the economy.

This includes scrapping business rates for some organisations and increasing the loans available to SMEs.

Claim
Sunak stated in the now daily Covid-19 update: “Let me confirm that, for those businesses which do have a policy that covers pandemics, the government’s action is sufficient and will allow businesses to make an insurance claim against their policy.”

He confirmed the government had reached an agreement with insurers on 17 March.

Johnson said: “Insurers understand they have to pay out to those businesses.”

The Association of British Insurers suggested earlier on that day that most business interruption policies would not cover firms for closures arising from the spreading coronavirus.

The trade body indicated that this agreement would change very little as, unless customers have purchased the right insurance, they won’t be eligible to claim.

A spokesperson said: “The Chancellor’s statement today is consistent with our statement this morning (17 March) where we said in the event businesses have the right cover, this type of notification could help make a claim.

“But, as the Chancellor acknowledged, the vast majority won’t have purchased extended cover and this remains unchanged.”

For all the latest industry news direct to your inbox, sign up for our daily newsletter.

• Tweet  
• Facebook  
• LinkedIn  
• Save this article
• Send to  
• Print this page  

• Topics
• Association of British Insurers (ABI)
• Business interruption
• Commercial
• Insurer
• Broker
• coronavirus
• Covid-19

Add a comment

Comments

blog comments powered by Disqus