HM Treasury has been quick to respond to the letter penned by Association of British Insurers (ABI) director general Huw Evans, in which the latter confirmed that 12 major insurance companies are not deducting government grants from business interruption payouts.
“Thank you for your letter of September 25, giving a commitment from many insurers that they will not be making deductions from business interruption insurance claims payments to account for the Coronavirus Small Business Grant Fund; the Retail, Hospitality, and Leisure Grant Fund; the Local Authority Discretionary Grant Fund; and their equivalents in the devolved nations,” wrote Economic Secretary to the Treasury John Glen MP in his response dated the same day.
“The impact of the current crisis on businesses and citizens is unprecedented, and the nature and scale of government support measures are exceptional. 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.”
Glen noted that making such deductions would mean that taxpayer funds are being channelled into savings for insurers, instead of them supporting pandemic-hit enterprises to ride out the COVID-19 disruption.
The City Minister went on to state: “I commend the signatories to your letter for this commitment not to make these deductions, and to review settlements where they have already been made. These insurers are ensuring small businesses retain the support that they need to navigate this crisis, protect jobs, and help our economy bounce back. I am grateful for the work of the ABI on this matter.
“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. 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.”
Meanwhile the MP added that he is certain that most organisations will now abide by the intention of the support schemes, especially since the Financial Conduct Authority has also written to insurers about the deductions and how they relate to claim calculations.
However, “if grant deductions continue to be made, the government will consider further action to protect the financial support being issued to businesses,” Glen told the ABI.
