A crisis such as Covid-19 affects all business sectors - but it especially puts a spotlight on insurers who can expect to be inundated with general inquiries and claims across multiple different lines, whether that be for health, life or non-life cover. Balancing the need for responding to this influx of activity in the contact centres with a quickly shifting remote workforce is an area that insurers are working to address. Of course, countries are at different stages of coronavirus activity.
So, how is the insurance industry likely to shape up to the unfolding crisis? What are the implications across the different segments of the industry? And what longer-term trends might the outbreak serve to usher in for the future?
Limited exposure for General Insurers?
Starting with non-life or general insurance first, I expect the impact on claims to be relatively manageable. Most insurers learned the lessons from the SARS outbreak of 2003 and introduced exclusion clauses for communicable diseases and epidemics/pandemics into most non-life products such as business interruption and travel insurance.
Business interruption policies usually pay out only if physical damage occurs to an organization's assets or operations - so coronavirus related claims may not be covered, but there is potential for future disputes on this issue. Travel insurance, meanwhile, may offer cover if a customer is diagnosed with the virus before or during their trip - but not for travel that is cancelled because of the pandemic, unless a customer has taken out premium `any cause' cover, which very few have. Of course, interest in `premium' policies could change in a world after COVID-19.
The Covid-19 coronavirus outbreak that began in China towards the end of last year has now become a global pandemic. Although it now appears to be slowing in China, the spread of the disease is accelerating elsewhere Governments are reacting in ever more dramatic ways, closing borders, imposing lockdowns and travel restrictions, shutting schools and colleges, and banning mass gatherings such as sporting events.
The way the crisis will run from here cannot be known. But alongside the tragic human toll, it is already having considerable economic impacts, posing major challenges to the global supply chain and certain business sectors such as airlines, travel and leisure, and causing significant stock market volatility and some precipitous falls. Central banks including the US Federal Reserve and the European Central Bank (ECB) have responded by cutting interest rates. The ECB has expanded its quantitative easing program to make more liquidity available and the Fed could follow suit after the US joined many other countries in declaring a `national emergency'.
No comments:
Post a Comment