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Law360, London (November 27, 2020, 11:28 AM GMT) -- Most insurance companies do not believe the U.K. government should try to prevent every business in the country from failing during the COVID-19 pandemic by being the insurer of last resort, an industry survey suggests.
The Chartered Insurance Institute, a professional standards body, found that 54% of 476 members it polled believed the government could no longer continue in its role as an "insurer of last resort."
The pandemic has accelerated some trends, such as a greater move toward online shopping, which would have affected high street shops in the long-term, the institute said.
"Ultimately, no government can save every business," Keith Richards, chief membership officer of the institute, said on Thursday. "The government cannot have a 'zero failure' regime that prevents every business from closing."
The insurance industry has proposed public-private partnerships that would provide business interruption cover for the worst-hit companies. Under the proposals, Pandemic Re would be a privately-funded reinsurer backed by government guarantees, similar to the U.K.'s terrorism reinsurer, Pool Re.
The insurance institute said there should be an "established approach" to pandemics, which clearly defines the scope of government intervention, so consumers can know what cover they need to have in place.
The standards body also repeated calls for members to adopt standardized wording in different policies to avoid confusion among customers over what risks were covered.
The CII has said it did not want a repeat of the test case on business interruption insurance, brought by the Financial Conduct Authority on behalf of 370,000 businesses forced to close during the pandemic. The institute said in September that it was concerned the High Court case has damaged trust in the insurance sector.
Brand Finance, a business valuation consultancy, said in May that insurers could face severe damage to their reputations as a result of their response to the crisis. The top companies risked seeing $100 billion shaved off the value of their brands.
--Editing by Ed Harris.
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