For an industry entirely based on understanding risk, insurers are certainly playing a risky game. They are fast becoming the villains of this crisis as they stubbornly refuse to pay out for cancelled holidays, closed businesses and abandoned weddings.
But the salt in the wound, as our cover story reveals today, is that the same insurers who are refusing to pay out in their loyal customers’ hours of need are still asking the very same customers to pay for the privilege of having insurance.
People are still paying or have already paid for travel policies despite the fact that they are unable to go on holiday. Businesses are still forking out for cover that is now largely redundant – yes, there is still the risk that a hurricane blows the roof off a hotel, but the chance of a fridge falling on a customer’s head is non-existent if there are no customers and the kitchens are closed.
So the cash keeps rolling in to these firms for policies which will never be claimed on as no one is booking travel right now.
In one particularly egregious case, one insurer agreed to give a customer three months of free travel cover – but only if he renewed his annual policy with a 75pc price hike. This sort of behaviour should shame the industry to its core.
It can be done: some insurers have conceded that the risk priced into the original premiums is no longer appropriate. Admiral has refunded £25 to all motor policyholders based on the fact that during lockdown there are fewer cars on the road, reducing the chances of an accident.
When they are not cowering in the small print – dubiously insisting that Covid-19 is “not a plague” or that losses as a result of the lockdown do not qualify as losses due to disease – insurers are begging for mercy, pleading that to pay out on all the coronavirus claims would annihilate the industry.
Instead, the very firms whose sole job it is to assess risk and provide a safety net based on these calculations are asking hard-up consumers – the ones who responsibly took out protection – to go bankrupt so they don’t. It is truly perverse.
Consumers must not be forced to pay for the failings of the industry.
The insurers have failed to price in one significant risk to their monkey business: that those who do survive the crisis may find no one will ever buy their cover again. Hundreds of thousands of people and businesses are stuck with useless policies sold by insurers who have shrugged their shoulders and turned their back. Who will trust them now?