The news that Aviva paid out business interruption claims that came through brokers will be a “relief” to many businesses and “boost” the broker channel, according to GlobalData.
Despite claiming it had policy wordings excluding pandemics in 95% of its policies, the insurance giant made the payments through broker channels, which may now bring a rise in consumer confidence to the sector, the data group said.
GlobalData’s 2019 UK Insurance survey previously found that Aviva was the second largest SME business interruption insurer in the UK, with a market share of 7.1%.
In addition, 45.2% of UK SMEs purchased business interruption through brokers, making it the largest channel by a “considerable” margin.
According to the group, Aviva could now have a “significant” number of policies to payout on.
GlobalData insurance analyst, Ben Carey-Evans, said: “It is unclear whether that was a mistake by Aviva or just a benefit of using a broker, but it will greatly help the channel retain customers, who otherwise may have lost trust in the industry.
“The confusion surrounding payouts in business interruption insurance across the entire industry is likely to benefit brokers once the pandemic is over. SMEs will be scarred by potentially not paying out when they would have been expecting to.”
He added: “While this may result in retention rates falling, many businesses will feel as though they simply cannot afford to go without business for another extended period of time, for whatever reason.
“Many businesses are, therefore, even more likely to seek out expert advice to ensure they find the most suitable cover, and they understand exactly what they are and are not insured for.”