The estimate includes £2bn for Covid-19 business interruption claims, and £204m paid from Covid-19 related protection insurance claims, including life, critical illness, and income protection insurance claims.
In addition, £152m is expected to be paid on travel insurance claims, while £121m is expected to be paid across other general insurance products, including events, weddings, and liability insurance.
Of these claims, 123,000 claims have been settled with payment across all of the above business lines; a further 9,000 have received partial payments as of mid-January 2021.
Meanwhile, £697m has been paid out for these claims as of mid-January 2021.
In addition, Lloyd’s previously estimated a £500m cost of UK Covid-related claims, taking the current overall estimate up to £3bn for UK Covid insurance claims.
Huw Evans, ABI director general, said: “The Covid-19 pandemic is unprecedented in its impact and will be one of the biggest insured events of recent times. These latest estimates demonstrate the range of support ABI members expect to offer their customers as a result of Covid-19 related claims across a wide range of insurance policies.
“This data was collected from individual firms by the ABI in mid-late January, and millions of pounds continue to be paid out every week in claims settlements. The industry response also includes vital support to families who have lost a loved one to Covid who are receiving life insurance payments.”
He added: “However, we recognise the pandemic has also illustrated some uncomfortable gaps between what people expected to be covered for and what their policy was designed for. We need to learn lessons from this unprecedented event and redouble our efforts to improve consumers’ trust in insurance products.”