The COVID-19 crisis is unprecedentedly-affecting every individual and business on the planet, which means insurance companies are having to adapt quickly. Read on to find out more.
General Non-life Insurance
As insurance companies start to adapt to the COVID-19 pandemic, it is a good time to compare different insurance policies to find the best one for you. You can find the right insurance options to fit your life with PolicyScout The company will match you with multiple insurers in your local area, so you can compare each one and select the insurer that best suits your needs.
Insurance companies are able to adapt to general non-life insurance the most easily during these uncertain times because insurers learned many lessons from the 2003 SARS outbreak. After that time, the majority of insurance companies introduced exclusion clauses for pandemics and communicable diseases in relation to specific policy areas.
The two most significant areas to watch out for in general non-life insurance policies are trade credit insurance and workers’ compensation claims. The former covers businesses against debts that cannot be paid by their customers or suppliers. If increased numbers of firms go out of business because of the coronavirus pandemic, insurance companies could soon face rapid claims. But that will depend on factors like how long COVID-19 lasts and the extent to which the containment measures affect businesses’ operations.
If employers do not adequately protect their employees against exposure to COVID-19, there will be a spike in workers’ claims. At this stage, it is impossible to predict just how significant those claims could become, but insurers should brace themselves for worst-case scenarios.
Travel insurance may cover individuals if they are diagnosed with COVID-19 before or during their journeys. But people are unlikely to be covered if their trips are canceled due to the virus. Individuals will probably only be covered in that scenario if they have previously taken out premium cover for “any cause.” But premium insurance policies are likely to soon change in the world that is emerging post-coronavirus.
Insurance policies for business interruption typically only pay-out if physical damage is caused to an organization’s operations or assets. At present, claims related to COVID-19 may not be covered. However, that could change in the very near future.
Insurance companies will experience more losses via event cancelations, as major events are likely to be already covered for pandemics and epidemics. For example, analysts predict the postponed Tokyo Olympics will result in $2 billion of coverage.
Out of all insurance areas, it is life insurers who face the most challenges from the pandemic and lockdowns. That is not only due to mortality rates. Life insurers could feel a significant impact due to what is occurring in the financial markets too. That is because life insurers have long-term assets and liabilities, which can be significantly affected by market volatility. Movements in interest rates, equities, and credit spreads are creating enormous asset-liability management risks for life insurers.