Insurers in the UK are moving to close any loopholes in the terms of their business coverage to make sure the covid-19 pandemic is explicitly excluded.
The Association of British Insurers (ABI) has said that the travel insurers in the UK could face a record-breaking estimate of at least £275m in claims over the covid-19 outbreak. This could be the highest pay-out for passenger flight cancellations, till date.
The industry has been criticised for sticking to a tough line since the crisis began that the outbreak is already excluded from many policies.
They are rushing out a whole series of exclusions in all kinds of different contracts"
Now, the industry is tightening the terms to try to reduce their exposure to any future costs as many contracts are up for renewal on April 1.
"They are rushing out a whole series of exclusions in all kinds of different contracts," Bruce Hepburn, chief executive of Mactavish, a claims specialist, told the FT.
"The big worry is that these are very broad exclusions." "They are making sure not only that they were not on the hook when [the outbreak] happened, but that they won't be on the hook at all. It really doesn't feel like they are sharing the pain," he added.
Approximately 400,000 claims solely in relation to the pandemic event are expected in the first quarter of this year.
ABI stated that providing widespread insurance cover against pandemics would be virtually impossible without state support as the amount of capital insurers would have to hold against the risk would cause completely unaffordable prices for customers.