The UK’s largest insurer Aviva has said it expects to pay out £160m for insurance claims related to Covid-19 after some of the cost is taken by its reinsurance partners. According to its trading highlights, life insurance sales grew by 28% to £12.3bn, compared to 2019 figures of £9.6bn, while it recorded a 3% increase in general insurance premium from £2.3bn to £2.4bn. Aviva was identified yesterday as one of two insurers facing legal action from Hospitality Insurance Group Action and its representative Mishcon De Reya. In its trading update, the insurer said it estimates business interruption claims totalling £200m, but added that the “vast majority” won’t pay out for Covid-19 disruption.
A report from insurance governance advisor Mactavish Group has revealed that 80% of brokers’ income comes from insurers, with 20% coming from clients. The firm announced the findings along with its opinion that they show a “huge conflict of interest”. The paper, entitled Broker Conflicts, also suggested that much of a broker’s revenue is directly linked to the price of premiums, so they benefit when insurance costs rise, which Mactavish said is currently happening “partly because of the Coronavirus crisis”. The consultancy also believes intermediaries have increasingly started to use over-standardised policy terms, which are often pre-defined as part of a broker scheme or facility that sees them work with “a small group of preferred insurers on mutually beneficial financial terms”. It believes This has led to the increased use of generic policies that are often not adapted for client needs, an issue it said has been “exposed” by the issue around business interruption claims that has prompted several lawsuits.