Home / International / ABI rejects 'goodwill gestures' on business interruption
25 May 2020
The Association of British Insurers (ABI) has warned hospitality trade groups that underwriters cannot afford to make “goodwill gesture” compensation payments outside policy terms for business interruption.
The warning comes as QBE’s UK operations face the threat of a class action from a hospitality industry group.
“The scale of the problem would see the cost of such payments easily run into billions of pounds for which the insurance industry has not collected premiums or reserved,” ABI Director General Huw Evans says in a letter.
“Such goodwill gestures could therefore only be delivered at risk to insurer solvency and require insurance executives to breach their legal and regulatory responsibilities to do nothing that will endanger the financial safety of the company.”
Mr Evans says insurers are expected to pay out £900 million ($1.7 billion) to businesses for interruption as a result of the COVID-19 crisis as part of an estimated £1.7 billion ($3.2 billion) in insurance payouts in the UK from ABI members and Lloyd’s.
The One Voice Group of hospitality trade associations has written to the ABI calling for more funds to flow from the industry, saying that “with one or two exceptions, the collective failure of insurers to step up and meet their obligations has been deeply disappointing”.
Business interruption pandemic exclusions also remain controversial in the US, where the Insurance Information Institute last week appeared before a House of Representatives subcommittee.
“Any efforts to retroactively rewrite business interruption policies are not only unconstitutional but would imperil the insurance industry’s ability to pay covered insurance claims filed by American homeowners, drivers and injured workers,” CEO Sean Kevelighan said.