Most bars and restaurants would not be covered by insurance even if the government ordered a nationwide shutdown.
The Association of British Insurers (ABI) said in a statement on Tuesday that the “vast majority” of UK businesses do not have cover for coronavirus “irrespective of whether or not the government orders closure of a business.”
The statement pours cold water on the theory that Boris Johnson stopped short of ordering bars and restaurants shut in order to protect the insurance industry from a wave of claims.
The prime minister on Monday evening told Brits not to go to bars and restaurants in a bid to slow the spread of Covid-19. However, he stopped short of ordering all hospitality businesses to close.
The move led to anger from the hospitality industry, with business owners saying they would be unable to claim on their insurance unless they were legally told to shut. Jay Rayner, the Observer’s food critic, called the announcement “staggeringly reckless” and chef Raymond Blanc said it left restaurants in “no man’s land.”
Speculation began circulating on Twitter that the prime minister had made the fudge in an attempt to protect the UK’s insurance industry, which is one of the biggest in the world. Rayner said on Twitter the prime minister was “thinking more about big finance than people's livelihoods.”
However, ABI said on Tuesday: “Standard business interruption cover — the type the majority of businesses purchase — does not include forced closure by authorities as it is intended to respond to physical damage to the property which results in the business being unable to continue to trade.”
ABI added that “a small minority” of larger institutions had coverage for business interruption caused by infectious diseases but said individual businesses should check with their insurers.
Separately on Tuesday, two major UK insurers warned the spread of novel coronavirus was likely to hit their business this year.
Aviva (AV.L) said in a statement it “remains well capitalised”, with £2.4bn ($2.9bn) of cash on hand. But the company said it is “too early to quantify the potential impact on our financial performance arising from Covid-19.”
“At this point, we remain focused on supporting our customers and colleagues while maintaining our financial and operational resilience,” Aviva said. Shares were down 5% by lunchtime.
Royal London, which offers life and business insurance as well as pension products, said “trading conditions in 2020 are likely to be difficult” as a result of coronavirus. However, chief executive Barry O’Dwyer said: “Our robust capital position means we do not expect the virus to have any material long-term impact on our business.”