Chiamaka Ajeamo, [email protected]
As nations of the world continue to battle to eradicate the COVID-19 pandemic now ravaging the global economy and well-being, insurance stakeholders have been speaking on their expectations of insurers during the trying times.
Already insurance companies across the world have been counting their costs by way of business interruptions, with mounting claims coming from several areas, including travel insurance, business interruption insurance, life and health insurance among others.
In fact, according to a Hong Kong insurance sector lawyer, “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. While some large global firms buy coverage for communicable diseases, most “standard insurance policies” exclude such outbreaks to keep costs low,” the lawyer said.
Unfortunately, the above statement is not far-fetched as many sectors and individual companies are already bracing for large losses, as well as significant disruption to their business operations. These and more are giving insurers nightmares because it will surely affect their financial books when claims come knocking.
Nonetheless, industry stakeholders have said that they expect a lot from operators at this disastrous time in abating the effects of the pandemic.
In a chat with Daily Sun, Director, Business Development, Danslei Nigeria Limited and former Manager, Marketing, Anchor Insurance, Dr Uzoma Ofurum, said so much was being expected from Nigerian insurance firms on the ongoing global epidemic.
Ofurum said: “Life insurance companies should extend and add free of charge Coronavirus related coverages for people to obtain. This will drive sales by 30 per cent, as many people will quickly take advantage of it to buy life insurances.
“Insurance companies should introduce products for medical doctors and other medics exposed to risks during this pandemic. They should also sponsor professor(s) to establish a new school of learning in already existing tertiary institutions, with the aim of finding vaccines for communicable diseases such as the Coronavirus.
“Insurance companies should make contributions to National Centre for Disease Control (NCDC) for more test kits and equipment to combat this epidemic and since we are talking about social distancing, insurance sales forces should be re-engineered to work more on digital platforms,” he stated.
Similarly, the United Kingdom’s Financial Conduct Authority (FCA) has also set out its expectations from general insurers and has also provided information for policyholders about what they should seek from their insurance provider during the coronavirus pandemic.
The FCA release provides information on travel, motor and home, and private medical insurance. It also provides clarification in relation to suspension of products and policy renewals.
According to FCA’s Interim Chief Executive, Christopher Woolard, “We have already seen some firms make significant efforts in difficult operating conditions. We expect all firms to be clear and not misleading whenever they communicate and be fair and professional on how they deal with their customers.
Woolard added, “Customer behaviour is changing. We expect insurance firms to recognise this and treat their customers fairly, recognising the circumstances customers may find themselves in. We would not expect to see a customer’s ability to claim affected by circumstances over which they have little control over. Any customer concerned about their insurance should consider contacting their provider with any questions they may have.”
He further said, “We expect firms to clearly communicate any policy exclusions that may impact the cover and use of individual policies. This applies both to new sales or changes to existing policies (either mid-term or at renewal) – they must clearly meet consumers’ demands and needs.”
For FCA, “Insurers should consider, along with other challenges, the impact of staff absences and the need to ensure staff wellbeing on continuity of service. Firms must identify how staff absence or inability to use business premises can be sufficiently mitigated to ensure critical services are provided to customers. Where firms identify gaps through their planning that will, or could, cause harm to customers, they should notify the FCA through their usual supervisory contact.
“Many consumers are currently in a vulnerable position because of the coronavirus (COVID-19) pandemic. We expect insurers, given the unprecedented impact of coronavirus, to be aware of the circumstances that their policyholders find themselves in.
“We expect firms to consider very carefully the needs of their customers and show flexibility in their treatment of them. We are likely to see customers’ behaviours change because of the pandemic. For example, this could mean that customers may need to work from home or commute by car. We would not expect to see their ability to claim impacted by circumstances over which they have little control.”
“Firms must consider whether the customer is relying on a renewal for continuity of cover (taking into account any vulnerabilities). In such circumstances, it may not be treating customers fairly if a firm were to not renew (even though the product would otherwise be suspended).
“Policyholders who are due to renew their policy should have the policy coverage and exclusions clearly explained to them in all circumstances. Any exceptional cases of policyholder need should be considered by the insurer and all changes need to be clearly communicated,” FCA outlined.
Reacting to these expectations set out by FCA, the Director of Policy and Engagement for the Chartered Insurance Institute (CII), Matt Connell, stressed that it is unsustainable to expect insurance and reinsurance companies to be the ‘mechanism for a COVID-19 bail out.’
Though, Connell acknowledged that where insurers have made a contractual commitment to cover a risk they must honour it, however, the overall economic impact of the coronavirus outbreak will be huge, and can only by mitigated by government intervention.
For perspective, he noted that the London market paid out £19.7 billion in claims in 2018, whereas the UK financial package for COVID-19 currently stands at £300 billion.
“It is not in anyone’s interests to try to reinterpret insurance contracts in the light of recent events in order to make insurers the mechanism for a Covid-19 bail out,” Connell argued. “It would simply place responsibility on insurers that no private sector organisation could sustain.”
As a result, the CII believes insurers should be allowed to set the levels of risk and cover that are consistent with their risk appetite.
The Institute’s research also shows that the insurance sector does generally meet customers’ expectations on claims, suggesting that COVID-19 claims must be handled sensitively to maintain this reputation.
Connell further noted that “The issues for insurers that we are seeing from COVID-19, highlight the importance of professional advice for consumers.
“Although insurance has increasingly been thought of as a commoditised product, there is still a strong need for professionals who are able to talk to individuals and businesses about their circumstances and needs, and help them to plan a holistic approach to managing their risks, that includes insurance as a component of this wider solution.
“This is the only way of encouraging an understanding of what insurance can and can’t do, in a way that benefits consumers and helps them plan for the future,” he concluded.