We are the voice of insurance and long-term savings | Contact us

ABI Responds to queries on business interruption and government grants

The ABI has received a number of queries regarding business interruption insurance payments and the Government grant schemes.

In the letter, Huw Evans, Director General of the ABI has highlighted; 

In the small minority of cases where insurance is triggered, queries have been raised of why insurance payments may be affected by the payment of Government grants.  Insurance acts as a vital final safety net for businesses, stepping in where cover or support is not available elsewhere to fund irrecoverable losses. This is a long-established principle of insurance which also helps keep premiums affordable for customers buying the cover.

In repsonse to claims that have been made that insurers are treating the grant scheme as a subsidy to protect against losses, Mr Evans has outlined; 

The UK Government’s Small Business Grant and the Retail, Hospitality and Leisure Grant Fund replace firms’ lost income and are treated as such for tax purposes. If insurers were to make payments beyond those set out in the insurance policy, to cover income firms had not ended up losing, they would be unable to recover such payments from their own reinsurance. They would also risk being non-compliant with regulatory requirements that demand insurance executives hold the right amount of capital for the claims they have contractually committed to pay and that they manage the firms’ finances prudently and responsibly.

We have more general information about business interruption cover and the pandemic here.

More information on insurers response to the crisis and member pledges to customers can be found on the ABI’s COVID-19 Information Hub. 

You can read the full text of our response below

Last updated 01/07/2020