Interview: ABI's Huw Evans on not losing faith in insurance

Huw Evans ABI

The ABI’s director general discusses:

  • Business interruption policies around the world not covering pandemics
  • The “huge” expectations gap between insurers and policyholders
  • The industry’s “outstanding” operational resilience
  • The trade body’s relationships with government, FCA and FOS
  • Being ready and willing to give evidence to the Treasury Select Committee

It clearly is not great for the insurance industry’s reputation “to be in a position where it has so many unhappy customers,” Huw Evans, director general of the Association of British Insurers has admitted.

Evans, pictured, told Post that nobody in the sector was comfortable with the situation.

“No country in the world has widespread cover for businesses for pandemics,” he stated. “The UK is not alone in that …  this is not something that is routinely included in any country’s business interruption policies.”

The industry has been criticised in the press and by politicians for its response to the coronavirus crisis and payout levels to business interruption claims in particular.

Evans defended his members pointing out that the vast majority of policies do not provide cover for a pandemic and were not sold, priced or reserved for in order to do so.

“Because the policy is called business interruption, and in a minority of cases has some sort of provision for human infectious disease or notifiable diseases, policyholders very sincerely, in most cases, believe that they are covered.

“They have been very upset and disappointed that they are not.”

He accepted that this expectations gap is “huge” and said it was understandable when businesses were threatened with closure.

“Insurance is a contract-based business,” he argued noting it provides cover against a certain number of risks in return for a certain price.

“That can be a difficult thing to face when the one thing that you want to be covered for is not. That’s the position that we are in with some customers who genuinely have a misunderstanding about [being] covered.”

He summed up there was no easy way out of the situation.

“On the one hand, we have one of the largest insurer events in human history, and on the other hand, we have a very large number of people uninsured for that eventuality.

“It’s just a very uncomfortable paradox.”


The ABI leader also defended the achievements of the insurance industry since the pandemic crisis started.

“The insurance industry has worked very hard so far, but it’s still having very obviously a bit of a rough time of it. Both things can be true,” he stated.

Evans listed the operational resilience of delivering business continuity plans as an outstanding achievement. A largely office and call centre based industry had switched to remote and home working with “very minimal customer disruption”, he noted.

“That’s important because people are still making claims on a day to day basis,” he underlined citing £363m of ongoing flood recovery from storms Ciara and Dennis.

He also highlighted the ability and willingness of insurers to flex existing insurance products be it to allow working from home, changing vehicle usage or on pet and travel products.

This has helped remove anxiety and uncertainty for customers even if it has not generated headlines, Evans said.


Setting up action groups has though made headlines with disgruntled customers banding together to bring legal challenges over declined business interruption claims. He declined to be drawn on the merits of any stating simply that “ultimately the courts will have to decide” on cases.

He added he was confident every BI claim was being assessed by providers on its merits.

“There is a range of wordings across the industry, and therefore each firm that I know has been going through these cases one at a time to review the wording in each case.”

In the week leading up to the official lockdown the government’s message to the public about not going out was only guidance rather than a legal instruction.

There appeared to be confusion between government and the insurance industry during this period about paying BI claims.

“I don’t think there’s been any ambiguity around that for some time,” said Evans stressing that the two parties were working well together.

He praised the stance on not changing policies retrospectively highlighting the different noises in the UK and the US on the issue.

“That is a very important commitment for our industry,” he said explaining it helped to keep the UK as an international centre of insurance where contract law is respected.

“The government remains supportive of the view that you cannot retrospectively amend contracts, but also concerned to see, wherever possible, the insurance industry and its policyholders try to find ways forward.”

One such development seen last week was Admiral announcing £25 refunds per vehicle to customers in a package of Covid-19 related measures.

Due to competition law it was not an issue that could be discussed around the table at the ABI, Evans stated.

Also last week Jonathan Edwards MP tabled an Early Day Motion in the House of Commons calling for the government to force insurers to use dividends to pay coronavirus related BI claims.

This week the Plaid Cymru MP for Carmarthen East and Dinefwr told Post that the industry needed to be in contact with the Treasury more regularly and finding answers as customers were very angry and insurance was heading towards considerable reputational damage.


Evans responded that the ABI was using its “long established relationships” to deal with a range of departments including “daily contact with the Treasury”.

“The government has responded very proactively and in a very engaged manner to this crisis,” Evans replied.

“Clearly people can have different views about specific judgments that are made, but from where I’m sitting, ministers and officials have worked round the clock to try and manage the impacts of this process in a way that I think we should be supportive of.”

Similarly, the association is in discussion with the Financial Conduct Authority “on an almost daily basis around policy issues related to Covid-19”.

Evans praised the way the regulator had addressed logistical and organisational issues reordering its work programme to address key areas. In his view it has also given itself more time on other significant areas of its workload while providing clarity to the industry.

“There’s a lot of intensive discussions going on between the industry and the FCA at the moment,” Evans indicated. “They’ve been pretty collaborative thus far.”

Treasury Select Committee

Also this week the ABI put the cost of Covid-19 claims at £1.2bn for the industry.

Evans reported it is a working estimate that will be updated over time.

“There are some things it’s just too early to start collecting,” he said listing trade credit and life insurance as examples.

The timescale to produce the figure was set by the Treasury Select Committee which wrote to the ABI on 25 March asking for a reply in weeks rather than months.

“That determined we would be asking for estimates from members and not numbers they have absolutely validated,” Evans set out.

“We’re confident that it’s a sound working estimate, based on a very good market share, and a lot of detailed work by firms. But inevitably, there are some uncertainties in there.”

Along with the numbers evolving, Evans is open to being quizzed by the committee although thus far it has not requested that he make an appearance.

“I’ll be very happy to give evidence on behalf of the industry along with others,” he confirmed.

He suggested that currently the committee was looking for a headline figures and to know which products were being changed.

Evans repeated that the ABI’s response showed only 4% of products have been withdrawn since the start of the crisis and just 10% have been changed – in many cases due to being made extra flexible to help customers cope during the lockdown.

A further suggestion has been for the Financial Ombudsman Service to run a test case on a BI claim. The ombudsman indicated it was prepared to progress a Covid-19 related complaint as “quickly” as possible to help provide guidance to insurers and policyholders.

“The industry would welcome an orderly process with the FOS,” Evans commented revealing it had been in discussions.

Anything which is clear about a process and about how judgments will be reached will be welcomed.

“The challenge in part with the Financial Ombudsman Service is they can only adjudicate on the claims in front of them,” Evans continued.

“It is early days yet,” said Evans supporting the view that customers are entitled to an independent arbitration process which is an important part of the system.

“One industry”

Looking to the future Evans called on the industry – across brokers, insurers and reinsurers – not to have public spats and disagreements, particularly during a time of tension over BI claims.

“The public, and actually to a large extent politicians, don’t really know the difference between the insurance broker, a carrier and a reinsurer,” he began.

“They just don’t – they see one industry.

“It’s still important that we keep any difficult discussions private and, more broadly, continue to talk about the importance of staying insured for your everyday risks and not losing faith in insurance.”

Tackling the longer term horizon Evans concluded that he was not going to blithely talk about upsides when there were a lot of unhappy customers and people’s businesses were facing huge threats and challenges.

Along with addressing the possibilities of a pandemic re vehicle, he agreed there would be innovations that would be retained as the industry and society builds its way out of the crisis.

“I’m definitely not talking about upsides at the moment, I’m talking about a very difficult situation that needs to be managed,” he said.

“There are far too many unhappy customers out there,” he repeated.

Evans concluded: “We need to focus as an industry on doing everything we can to pay claims quickly and effectively where people have got a valid claim and to engage effectively in terms of arbitration and getting decisions made as quickly as possible, whether it’s through the courts or FOS or anywhere else on other claims.”

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