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Law360, London (March 20, 2020, 4:45 PM GMT ) Insurers have started to withdraw from the income protection market, a price comparison site said on Friday, as trade bodies warned that more than a million U.K. jobs are on the line from shutdowns related to the spread of COVID-19.
Compare the Market, one of the biggest insurance shopping sites in the U.K., said it had suspended sales of income protection over concerns insurers had effectively hollowed out cover by introducing exclusions related to the disease caused by the novel coronavirus.
Income protection insurance effectively pays customers' salaries if they are unable to work because of ill health or injury, normally for a fixed period or until the policyholder is fit to resume work.
Trade body UKHospitality warned on Wednesday that more than a million jobs could be lost across U.K. pubs, bars, restaurants and hotels as a result of government advice to halt all non-essential contact.
Compare the Market, owned by BGL group, is used by six million Britons every year, according to 2018 numbers. Customers are able to compare prices on insurance products ranging from motor to life.
"Some income protection insurance providers have decided to stop offering insurance or are reviewing the basis on which they will offer it, with the potential for coronavirus-related exclusions to be introduced," a spokeswoman for BGL said.
The company has therefore suspended sales of income protection insurance through its site in order to protect customers.
"Our priority is to ensure that our customers can be confident that the product they purchase is going to meet their requirements," the spokeswoman added.
She said sales would resume "as soon as we can be sure that the prices presented will meet the needs and expectations of our customers."
The company's closest rival, Go Compare, said while unemployment cover was not available at the moment, people could still get other elements of income protection, such as accident and sickness cover.
"All customers will have to sign up over the phone so that an adviser can make them fully aware of what is and isn't covered," the company said in a statement.
Insurers have been gradually reducing their exposures to virus-related losses, with brokers saying most new event cancellation policies would include coronavirus exclusions, and many insurers suspending sale of new travel insurance policies altogether.
--Editing by Tom Mudd.
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