The Association of British Insurers (ABI) said that members should expect to pay out over £1.2 bn in light of the ongoing pandemic.
According to initial estimates, this covers payments on business interruption, travel insurance, weddings policies and cancelled school trips.
The estimate forms part of the ABI’s response to the Treasury Select Committee, that sets out how insurers can continue to support customers as the pandemic continues.
ABI said that the data is aggregated to “provide as full a picture as possible at this stage”, and does not include claims made through Lloyd’s and the London Market which will reportedly be needed to provide a total figure for the UK market response.
Of the £1.2bn working estimate, £900m relates to business interruption claims, a “record” £275m relates to cancellation claims on travel insurance, and £25m relates to wedding insurance, school trips and events.
This is in addition to the estimated £363m that is expected to be paid to customers following Storms Ciara and Dennis earlier this year.
While most businesses will not have purchased insurance to cover against Covid-19, for those that have claims, some are “expected to be substantial”, according to the ABI.
Huw Evans, ABI’s Director General, said: “While many business owners are uninsured for pandemics, UK insurers still expect to pay over £1.2bn in claims, making this a significant insured event.
“From paying all valid claims, to providing a range of extra help and support to customers, insurers are working hard to reassure and support policyholders through this uncertain period.”
He added: “However, we are also painfully aware that the majority of businesses are uninsured for global pandemics, as is the case throughout continental Europe and North America. Although ABI members expect to pay £900m in business interruption claims, most policyholders are not covered for pandemic losses.
“We agree strongly that the UK should examine public-private partnerships to find a lasting solution, to enable more affordable, more extensive pandemic insurance cover to be available to those firms who want it.”