The Association of British Insurers (ABI) director general Huw Evans has said that paying out on claims that fall outside of the scope of business interruption policies would threaten the solvency of insurers.
His comments came in response to a letter sent to ABI chair and Allianz CEO Jon Dye by One Voice Group – a coalition of 50,000 pubs and 2,000 brewers – urging insurers to engage with the group because “the vast majority of our pub sector businesses have taken a policy including business interruption”.
In the letter, written by the group’s chairman Stephen Gould, it was claimed that industry survey data found that 1% of hospitality businesses, 3% of British Institute of Innkeeping members, and 4% of British Beer and Pub Association member companies have received a positive response from their insurer.
In a response letter, Evans said: “I can, of course, appreciate the desire to see insurers make compensation payments outside of policy terms, especially given the very difficult situation facing the hospitality sector.
“However, 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.
“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.”
Responding to the expressed view that businesses were due a payout because the majority took out interruption coverage, Evans pointed to the fact that the majority of coverage was written for “day-to-day risks” such as damage to premises from fire or flood, motor accidents, supplier failure and employee harm.
“Such policies are not designed to cover a global viral pandemic of a kind we have not seen in over 100 years in this country and nor were your members charged for such cover,” he added.