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Law360, London (April 3, 2020, 4:49 PM BST ) U.K. insurers expect to pay more than £1 billion ($1.23 billion) in claims connected with coronavirus losses, a trade body said on Friday, rejecting accusations that the sector was "weaseling out" of properly compensating customers.
Huw Evans, director general of the Association of British Insurers, said travel insurers alone were likely to pay out £275 million in flight cancellation and repatriation cover.
The comments come amid mounting criticism of the sector's handling of coronavirus-related claims, with lawmakers in the U.S. mulling plans to demand insurers pay compensation to businesses forced to close, even if those businesses didn't have the correct cover in place.
"What insurers cannot do is pay out for claims where customers have not paid for the cover," Evans said. "This is a shortcut to insolvency."
Business interruption insurance, which pays out if a company is forced to close, is generally limited to physical damage. Add-ons exist to cover cases when a company closes because of "notifiable disease" outbreaks, but those only take effect where the government has ordered a company to close, or the outbreak is on site.
The ABI has previously said that only a "very small minority" of businesses will have the required business insurance in place to enable them to successfully claim.
Last week, lawmakers in New York introduced a bill that would force insurers to retroactively cover business interruption claims from COVID-19, even if the policy did not originally insure against closure from an infectious disease or had specific exclusions.
Evans said the ABI was willing to work with the government in drawing up a "better solution" for pandemic insurance for business. The body has previously called for government to provide subsidies for pandemic insurance products to be available more widely.
"The state will have to be front and center of such an effort," Evans added. "But the insurance industry is ready to talk about how it can be an effective partner in building more widespread protection against pandemics than we have seen with COVID-19."
--Editing by Rebecca Flanagan.
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