Allianz chief exec said he understood why brokers and customers might argue that the business interruption cover is there
The FCA business interruption (BI) test case has been ”a difficult time reputationally” for insurers, Allianz chief executive Jon Dye told Insurance Times.
”The BI issue is clearly there, and I don’t think anybody could disagree that reputationally it’s been a difficult time for the industry”, Dye said as part of a wider discussion of the company’s half year results.
He added that it was important to remember ”the really good things that we’re doing for our customers, particularly in these circumstances but actually every day”.
”The insurance industry is paying out millions in claims each and every day to help them deal with the calamities they deal with under ordinary circumstances.”
Dye, citing the ABI, said the industry was in the process of paying out an estimated £900m of covered BI losses. Allianz itself has paid out 950 claims either in full or on an interim basis, and has set aside £80m to potentially cover the total.
Two-fold
He said the Covid-19 BI challenge being faced is two-fold.
”Firstly, there is an insured event here. It may well be that the industry did not intend to insure a pandemic, but certainly, there is an element of covered claims out there.”
”We’re dealing with that event as we always do by looking after the customers and making sure claims are paid as quickly as possible. But there is also a substantial proportion - the vast majority - of BI policies that do not cover the pandemic”, Dye said.
He admitted that because of some of the complexity of the wordings, the industry may not have intended to cover a pandemic. ”But one can see how in some circumstances, brokers and customers might argue that the cover is there”, he added.
”And that is what the FCA test case is for. I completely support the FCA test case process. It will give the clarity that customers are looking for, and the legal certainty that insurers are looking for.
Hugely complicated
Steve Treloar, chief executive of LV=GI, said the industry needs to do more to communicate the good things it does for customers.
”Maybe its for us to get that message across more strongly. There are examples such as where we’ve managed to get nurses back on the road or we’ve fast-tracked keyworkers getting back into vehicles.
”We’ve done some great things, we need to make sure that they balance out some of the more negative messages that are coming through, which are unfortunate.”
Dye added: ”The case is clearly hugely complicated, and no doubt when the judgement is received, we’ll work to process the outcome. But we are in a situation where the insurance industry is not able to bare the whole burden of the pandemic.
”The numbers are just too big, and in the end we have to look to government.”
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