Media stories about insurers not paying out COVID-19-related claims sent sentiment toward the sector to new lows in March and April and could cause lasting damage, industrial analyst GlobalData says.

Insurance has fared “particularly poorly” in news sentiment since the start of the pandemic, GlobalData says.

While the industry has received more positive stories since May, the analyst says the three months of extremely negative coverage will be damaging to the industry long term.

Analyst Ben Carey-Evans says reports that many insurers, especially in travel and business interruption, would not pay out claims after COVID-19 was declared a pandemic was “incredibly damaging to consumer trust and will have lasting damage”.

“The insurance industry has always struggled with its image and consumer trust, and that fell to new depths in March and April,” he said.

A recent slight upturn in sentiment may be due to travel beginning to open up to consumers again as well as some business interruption insurers agreeing to pay out in some cases under pressure from the UK regulator in April.

GlobalData’s news sentiment index tracker revealed the insurance sector reached its lowest ebb in the second quarter, with a sentiment score of 0.42, but has since recovered to 0.44 in the third quarter. Before the pandemic, its score was 0.57.

See Analysis.