Lloyd’s of London boss warns insurers face record losses and rates could rise as they pay out at least £1.2bn on Covid-19 claims

Business Insurance rates could rise sharply this year as insurers take the hit on Covid-19 claims and payout at least £1.2bn.

INSURERS are bracing for a £1.2bn hit from the coronavirus crisis as the boss of Lloyd’s of London warned the industry is facing record losses.

Watchdogs are predicting a rise in disputes between companies and insurers over whether their cover includes the financial fallout of Covid-19. The Treasury Select Committee is urging insurers to be fair with claimants.

Firms expect to pay out £900m in business interruption claims alone after companies were plunged into chaos by the lockdown, the Association of British Insurers (ABI) said.

The costs will land despite intense criticism of the industry for refusing to compensate thousands of customers who thought their insurance would cover profits lost as a result of a pandemic.

The British Chambers of Commerce’s head of economics, Suren Thiru, said cash flow was an “urgent concern” for its member businesses “so it is particularly disappointing that many are facing an uphill struggle to access such a vital lifeline.

“The insurance industry has the opportunity to demonstrate that it is there for our business communities when they need it most – and work together with government to help their customers weather this unprecedented economic crisis.”