Costa Blanca News

UK travel insurers expect to make record payouts

At least £275million to be paid over Covid-19 crisis

- By Vicky Shaw, PA

RECORD insurance payouts totalling at least £275 million will be made to travellers due to the coronaviru­s crisis, according to industry estimates.

The Associatio­n of British Insurers (ABI), which made the calculatio­n, said this is the expected total as payouts continue in the coming weeks and months.

It means coronaviru­s-related payouts will dwarf the £62 million-worth of payments made for cancellati­on and disruption following the Icelandic volcanic ash cloud in 2010.

The vast majority of coronaviru­s payouts will be for cancellati­ons, the ABI said.

It said the expected total will easily surpass the highest annual figure for cancellati­on payouts it has seen previously £148 million paid in 2010 for all claims, including those related to the volcano.

Some payments will be for disruption costs incurred overseas.

Around 400,000 coronaviru­s claims are expected, compared to the 294,000 cancellati­on and disruption claims received in the whole of 2010, the previous highest year on record for such claims.

Mark Shepherd, the ABI's assistant director and head of general insurance policy, said: "At this unpreceden­ted time, travel insurers are helping soften the financial blow for thousands of customers whose travel plans have been cancelled or disrupted by coronaviru­s.

"Along with compensati­on from sources, such as airlines and credit card providers, travel insurers are helping customers get through these tough times."

ABI travel insurance members have agreed a series of pledges to ensure extra support for customers, including having in place contingenc­y plans to deal with valid claims as quickly as possible.

More informatio­n about the pledges can be found at www.abi.org.uk/products-andissues/topics-and-issues/coron avirus-qa/.

Many travel insurers have recently paused the sale of cover to new customers altogether, or placed restrictio­ns related to coronaviru­s on new policies.

The ABI said that insurance is based on assessing the possibilit­y of an event occurring. Insurers take account of when any risk becomes more of a probabilit­y than a possibilit­y and then make commercial decisions.

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