Shares in insurance firms hit hard

Shares in insurance firms hit hard

London's Ftse-100 index fell back, as a rising global death toll crushed hopes that the coronavirus crisis was subsiding, while insurers took a hit over halts in dividend payments and Tesco warned of a surge in costs.

Shares of Aviva, Direct Line, RSA, and Lloyds of London-member Hiscox fell between 3.8% and 8% after saying they were cancelling 2019 investor payouts.

Both EU and British regulators had urged restraint on dividend payments and payment of bonuses as a buffer against potential losses from the pandemic. 

Legal & General, which said last week it remained committed to distributing its own dividend, was down 3.8%.

Tesco shares fell 0.6% as it forecast costs from the pandemic of up to Stg925m (€1bn) and warned it was unable to give a profit forecast for the current year.

However, it defended its decision to pay dividend. 

“Markets have come to a realisation that it’s not easy to have a V-shaped recovery.

"Even if we are looking at prospect of easing restrictions, there is still lots of uncertainty,” said Ulas Akincilar, head of trading at online platform Infinox.

In Ireland, insurance loss assessor Balcombes Claims Management said the insurance industry was "shooting itself in the foot'' by not paying out on business interruption claims during the crisis. 

Director Jim Flannery said that owners of pubs, restaurants, coffee shops, and retailers, have a good case to make claims under their insurance policies. He said insurers are currently saving "hundreds of millions of euros'' in motor claims because the roads are empty and "yet they are refusing to pay out on legitimate business interruption claims."

“The insurance industry is shooting itself in the foot.

"While everyone else and all other business are suffering, they are refusing to support small businesses and ordinary workers on whose premiums they will be relying on in the future - yet they are failing to support their survival.” he said.

- Reuters and Irish Examiner

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