Insurers on Spotlight Over Coronavirus

Companies and individuals affected by the coronavirus are facing an agonising trawl through the small print to see whether their insurance policies cover costs.

Industry experts said a wide variety of polices could pay out, but that epidemics and pandemics were often deliberately excluded from cover. It is far too early, they added, to make estimates about what the overall cost to the insurance industry might be.

According to a report from the Financial Times, the virus, which has so far infected more than 14,000 people and killed more than 300, has led to widespread disruption, with cities in China being closed off, and travel to and from the country badly disrupted as international carriers halt flights.

“Clients are asking about the extent of their cover,” said Clarissa Franks of insurance broker Marsh.

“Clients with manufacturing in the key regions of China will be affected.”

Three areas of insurance are most likely to be hit: travel, business cover and life insurance. More than a dozen airlines including British Airways, American Airlines and Cathay Pacific have cancelled some or all of their flights to and from mainland China.

Most airlines are offering refunds or rebooking on to different flights. The large number of cancelled flights, combined with travel restrictions into and out of affected areas, means many travel policies could pay out.

“Travel insurers are bracing themselves for a lot of claims,” said Michelle Crorie, a partner at law firm Clyde & Co.

“Travel looks like it will be paying out most at the moment.”

The travel insurance industry has responded by reminding customers they should look elsewhere in the first instance. An advisory notice issued by Allianz this week said airlines should refund the cost of cancelled flights, while credit card providers might also offer coverage for losses.

After that, it said, customers should look at “the terms and conditions of their travel insurance policy.”