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Law360, London (March 3, 2020, 4:11 PM GMT ) Insurer Direct Line said Tuesday it has so far received more than £1 million ($1.26 million) in travel insurance claims as thousands rush to cancel vacations in the wake of the coronavirus outbreak.
The U.K. group said in its 2019 financial release that the outbreak of the novel coronavirus could impact its travel insurance portfolio for the coming year.
The news comes after specialist insurer Hiscox said on Monday it had started receiving claims from the coronavirus outbreak on travel insurance, as well as event-cancellation insurance.
"Like all businesses, we are subject to the consequences of disruption to financial markets and global supply chains which, over time, could impact the performance of our investments and the cost and speed of fulfilling customers' claims," Direct Line said in a statement.
The insurer said it has got reinsurance cover, to insulate it against claims between £1 million and £10 million.
Insurance price comparison site Go Compare said on Friday that the number of people taking out travel insurance online has risen by 277% over the past seven days. The company attributed the surge to worries about the impact that the virus could have on vacations.
Law firm Horwich Farrelly warned on Tuesday that the virus could trigger an "epidemic" in travel insurance sickness claims, many of which are speculative and potentially fraudulent.
"History tells us that it will only be a matter of time before claims management companies and solicitors alike jump on the coronavirus bandwagon and start advertising for claims," said David Scott, partner at Horwich Farrelly. "Indeed, there are already a few firms of solicitors suggesting that people can be compensated if they become infected while abroad."
Scott said that while it may be possible to claim against a tour operator or hotel if people are infected abroad, it would be "incredibly tough" to do so successfully.
Travel insurance providers have in recent years been battling against rising fraud in gastric-related sickness claims. The Association of British Travel Agents said last year the emergence of claims management companies operating in the sector had driven up claims by 500% over the past three years.
--Editing by Tom Mudd.
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