By Anoop Khanna
The UK government has criticised as ‘disappointing’ the approach by a number of insurers in deducting the impact of government grants from COVID-19 claims payments.
In a letter addressed to the Association of British Insurers (ABI) on 25 September 2020, Britain’s economic secretary to the treasury and city minister John Glen said the move by these insurers to deduct financial support payments was ‘quite clearly’ not in line with the intention of the schemes.
A news report on the insurance website https://www.theinsurer.com said the letter mentions that making such deductions would mean that taxpayer funds are being channelled into savings for insurers, rather than supporting pandemic-hit enterprises to ride out the disruption brought by the pandemic.
“It is disappointing that not all insurers have signed up to this approach, when these deductions are quite clearly not in line with the intention of the support schemes,” Mr Glen said.
“I strongly encourage those insurers who are making these deductions to follow this example, to respect the spirit of these government support schemes, and to consider the difficulties being faced by businesses during this time.”
Mr Glen said if grant deductions continue to be made, the government will consider further action to protect the financial support being issued to businesses.
“It is the government’s firm expectation that grant funds intended to provide emergency support to businesses at this time of crisis are not to be deducted from business interruption insurance claims. The principle of these grants is to provide emergency support and help businesses survive.”
Mr Glen’s letter was in response to a letter from ABI director general Huw Evans which confirmed that 12 commercial insurers – Aviva, Zurich, RSA, Allianz, Hiscox, AXA, Direct Line, Covea, Ageas, QBE, Ecclesiastical and AXA XL – had all committed to not deduct government grants from pandemic-related business interruption pay-outs.
The grants – which include the Local Authority Grant, the Small Business Grant and the Leisure, Retail and Hospitality grants – were launched by HM Treasury to provide emergency financial support to small businesses which had been forced to close as a result of the government response to the pandemic.
Asia Insurance Review