All insurers are being warned they must not seek to profit from the pandemic. The industry is expected to pay out more than £1.2 billion due to the virus, according to the Association of British Insurers (ABI).
But firms are already facing legal action after refusing payouts to crippled businesses, while others are expected to profit from a fall in claims elsewhere.
James Daley, of Fairer Finance, says: ‘Insurers must make it clear that they will do the right thing by their customers, and that this isn’t just an opportunity to bolster their bottom line.’ Here Money Mail runs the rule over where households could lose out…
Squeeze: The industry is expected to pay out more than £1.2 billion due to the virus, according to the Association of British Insurers
Travel cover
Premiums are up by more than 20 per cent compared to last year, while the number of products available is down by a third.
It comes as the ABI said it expects insurers to pay a record £275 million to customers whose trips have been cancelled due to coronavirus.
The cost of an average single trip policy has increased from £26 to £31 over the year to March, according to GoCompare.
One Money Mail reader said her annual premium had soared from £63 to £212, even though she had not made a claim.
Customers are also out of pocket due to costly cover they no longer need.
Retired Royal Marine Bruce Myles paid £458 for cover with Staysure, but it is now worthless because his trip to Hurtigruten in Norway on March 21 was cancelled.
Bruce, 79, and his wife Anne, 77, from Plymouth, Devon, have been able to rebook the trip, but Staysure refused to transfer the policy or provide a refund. Instead, the insurer has offered a £22 voucher or 20 per cent off his next policy.
Bruce says: ‘I have lost £458, a sum I can ill afford to lose, as a pensioner.’
Staysure says its underwriters are not allowed to cover customers for more than 13 months after the policy was sold and the rebooking falls outside this window, but it is working to improve its offer.
Driving bill
Insurers are expected to make huge savings from a drop in motor claims as drivers are warned against all non-essential travel.
The industry could make an extra £1 billion in profits if claims fall by 50 per cent over three months, according to pay-as-you-go insurer Cuvva.
Last week Admiral said it would give £25 back to each of its customers, piling pressure on others to follow suit.
But insurer By Miles estimates that drivers could be up to £58 out of pocket by the end of a two-month lockdown.
Meanwhile, motorists with ‘telematics’ or ‘black box’ policies, which offer lower premiums for driving safely, are losing out because they are no longer using their cars.
Quinn Mitchell, 18, from St Neots, Cambs., is paying £1,329 per year to insure his Kia Picanto with Adrian Flux.
He would normally get a 67p discount for every day he didn’t drive, as a reward for lowering the risk he posed. But days after the lockdown was announced, this was cut to 42p, then to 18p the following day.
Quinn’s dad Dean, 50, says: ‘It feels as though they are trying to make a profit from the coronavirus lockdown.’
Adrian Flux says it is trying to amend its programming and will return savings to safe drivers.
Health costs
Pressure is mounting to compensate health insurance customers after private facilities were handed over to the NHS.
Peter Gant, 83, pays £322 per month for a medical scheme with Axa PPP. The pensioner says he fully supports prioritising the NHS, but questions why premiums have not been reduced to reflect restricted access.
Peter, from Newport, Shrops., says that ‘minor benefits’ offered by Axa, such as online access to doctors, are no substitute for access to private medical treatment.
Axa expects claims to level out after the pandemic is under control and customers catch up on treatment. It has vowed to pass on any overall cost reductions, but customers may have to wait until March 2022 for any refunds.
At home
Home insurance claims could fall during the lockdown as more people stay indoors, according to comparethemarket.com.
Aviva says it has already seen a drop in claims for burglaries, accidental damage and water leakage, as homeowners are able to fix problems more quickly.
Private landlords claiming for unpaid rent are also being rejected due to small print. ‘Rent protection’ or ‘rent guarantee’ is usually sold as extra cover on a standard landlord insurance policy.
But while many think it will pay out if a tenant can’t afford rent, small print usually insists an eviction must be in progress or have taken place. Most policies exclude claims that arise as a result of government action.
An ABI spokesman says: ‘Many [business] insurers have extended unoccupied premises conditions.
‘Additional help includes motor policies being extended to cover volunteer driving, travel insurance being extended to travellers stuck abroad, and enhanced online medical services under private health insurance.’
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