Covid-19: ABI clarifies position on business insurance

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The insurance industry has faced a customer backlash as most commercial policies do not cover for business interruption caused by pandemic.

The Association of British Insurers (ABI) reiterated its stand on business interruption cover following the government intervention to ensure providers pay out to those with pandemic business interruption cover.

The government assured policyholders yesterday (17 March) these particular claims will be accepted by insurers even though current business closures are voluntary and not mandated.

Unprecedented
The ABI commented: “The spread of coronavirus is unprecedented in modern times and we understand this is an incredibly difficult time for families and businesses. 

“Standard commercial insurance policies – the type the vast majority of businesses purchase – provide cover against a wide range of day to day risks including damage caused by fire, flood, theft and accidents involving employees.” 

A spokesperson detailed: “Insurers pay out £22m each day to firms through these policies, supporting millions of businesses across the UK each year. 

“Only a very small minority of businesses choose to buy any form of cover that includes local closure due to an infectious disease.”

The ABI was criticised for the tone of its former statements yesterday by former Post editor and journalist David Worsfold, who wrote: “The statements from the ABI have been blunt, insensitive and totally lacking in awareness of how insurance is perceived.

“If people didn’t buy the cover that is a tough one to deal with. Many might have claims against their brokers if not properly advised.”

David Worsfold's ABI tweet 17 March 2020

Yesterday the ABI issued a short statement outlining why most businesses would not be covered for business interruption. It later updated that following the government announcement yesterday (17 March) evening.

Today’s ABI statement further explained the impact of the government position on insurance pay outs: “An even smaller number will have cover enabling them to potentially claim on their insurance for the presence or impact of the Coronavirus pandemic. The Government’s clarification yesterday will help some of these policyholders claim if the other terms and conditions of the policy are met. 

“We strongly recommend that every business should check with their insurer or broker if they wish to confirm the type of cover that they have purchased.” 

Measures
Yesterday, Chancellor Rishi Sunak, unveiled a £330bn package to help businesses through the current coronavirus pandemic.

Some insurers have already shared their position on business interruption. A number suggested that customers would not be covered under Covid-19 as it is not specified on documents while others said they would take a case-by-case approach depending on policy wordings.

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