Chiamaka Ajeamo, [email protected]   08060655687

Coronavirus has turned out a nightmare creating global apprehension with over 80,000 cases of infected persons and almost three thousand deaths recorded.

As the number of infected cases keep surging in various countries and new outbreaks in other countries, the epidemic is both causing panic and greatly hurting economies of these countries with many businesses recording losses and others shutting down.

With the global pandemic spreading across borders, spiking downtrends in markets, the insurance industry is also taking a hit as a member  of the financial markets.

In fact, in a recent report, the Managing Director and Head of Valuation Advisory, Duff & Phelps, Michael Weaver, said beyond the impact that coronavirus has had on many life insurance firms are likely to suffer the most tangible business losses from the outbreak.

“Insurance firms are going to be the first in line to feel the pain of any widescale illness or travel disruption because following countless cancelled flights, holidays and events, travel and leisure businesses will quickly begin to feel the effects of disrupted business continuity and will not hesitate to make a claim.

“With business and leisure trips cancelled, plans amended and access to some parts of China restricted, individuals and businesses have had to claim on their travel insurance as a result of the coronavirus.

“Travel insurance covers medical treatment, repatriation, cancellation of trip and treatment while abroad, but the level of cover varies greatly depending on the policy that has been purchased. If many hundreds of thousands of policyholders have to claim, can the insurance industry cope with the administration and the costs?”, he queried.

But speaking to Daily Sun, a Nigerian insurance broker who pleaded anonymity said global epidemics such as the coronavirus are usually excluded by insurance companies due to fear of the large claims it brings to insurers except in few rare cases that are mostly dependent on the kind of policy obtained by clients.

He however noted that despite the exclusion, the insurance industry will still be affected by the pandemic in areas like business interruptions, travel and health insurance policies.

He said:” Due to Covid19, there will be an increase in claims payment by  operators with regards to health and travel insurance which will go hand-in-hand this period. This is because people will frequent the hospital unlike before when they fall ill with symptoms of the disease such as coughing, sneezing and fever and normally these ailments are covered under the travel and health insurance policies. So, at the initial stage of treatment of these ailments  insurers will foot the bills but the policy does not cover the virus and this is where the government steps in.

Also because of this outbreak, there will be a high demand for travel and health insurance by most countries especially the affected one from travellers but it will not affect the price of the policy since it is always priced ahead based on experiences from the previous year, note, the Covid 19, is an exclusion in health insurance as it is a special infectious disease where the  government takes responsibility, hence it is like catastrophic risk.

“One will think with the increase in demand for the travel insurance, operators will make huge profits but this may not be the case because the claims they will settle if  enormous will not commensurate with premium paid also note  the prices for the policy did not increase either even with the demand”, he explained.

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He added that  even though companies buy business interruption policies with their property insurance to cover loss of revenue if they are forced to close temporarily,  those policies are also likely to exclude communicable diseases such as the coronavirus.

Also speaking, the former Manager, Marketing, Anchor Insurance,  Dr Uzoma Ofurum, the virus will affect travel insurance even though for now the terms and conditions of the policy may remain stable.

Ofurum observed that some insurance companies may suspend issuance of travel insurance  in line with its risk appetite till the scourge subsides but for those who already have travel insurance and have now lost their lives due to the virus while on their trips to pandemic areas, the insurance covers would handle medical costs and repatriation.

“Some insurance companies will see Coronavirus as opportunities to sale more travel insurance policies, while others may avoid it completely for now. It is an individual thing. But anyone travelling abroad these days should endeavour  to purchase a travel insurance policy with appropriate cover, not the ones that will tell you they excluded coronavirus from the policy”.

Meanwhile, a report by Reuters has disclosed that several global companies ranging from hotels, airlines and industrial houses are to face high coronavirus costs due to insurance exclusions.

According to the report, these companies are expected to handle the bills for disruptions caused by this pandemic adding that, with over 132 deaths in China and new cases being reported around the world, firms are to face billions in losses linked to events, travel cancellations and closure of businesses.

“For insurers, the bulk of the claims from this outbreak will come from businesses, mainly travel, hospitality and event firms, followed by mortality and healthcare costs,” said a Hong Kong-based insurance sector lawyer with a global law firm.

While some large global firms buy coverage for communicable diseases, most “standard insurance policies” exclude such outbreaks to keep costs low, said the lawyer.

According to global insurers, prior cases of viruses, such as Severe Acute Respiratory Syndrome (SARS), Ebola and Zika, have taught them to be more cautious about exposure, with specific virus exclusions added to most basic coverage policies. Consequently, most events cancellation policies would not cover the new virus.

“SARS which spread to 37 countries in 2003 caused $4 billion worth of economic losses in Hong Kong, $3-$6 billion in Canada, and $5 billion in Singapore”.

While most travel insurers are likely to reimburse costs associated with trip cancellations and medical expenses for policies bought before the spread of the virus, some are excluding the coverage for select destinations now, industry sources revealed.

However, insurers such as Aviva, Allianz and AXA said individual policyholders would be covered if they are impacted by the virus, provided they follow travel advisories from governments.

Notwithstanding the impacts the virus has on the industry, operators are however optimistic that they will be able handle the risks that confront them with experiences from similar cases because there is typically no area of the insurance business that will not be affected by a global pandemic and they are in the business to manage risks.