Covid-19: Implications for Insurers

As the Covid-19 coronavirus continues to make its presence felt, I’ve been asked what the implications are for the insurance industry.

My first response is that Covid-19 isn’t likely to cause many (any?) insurers to collapse. Some lines of business are clearly more challenged than others, obvious P&C examples being business interruption and travel insurance. But the former will often exclude situations such as this. And the latter, even if payouts are required, is a relatively small line of business for the vast majority of carriers.

In the Life space, there’s likely to be an up-tick in claims, but the virus is most devastating to age groups whose cover is likely to have expired. And, with apologies for being morbid, long term care claims could well reduce below earlier expectations, reducing payouts.

It’s also likely that there will be a PR backlash against insurers, when some policyholders find that Covid-19 isn’t covered, and that will need to be managed carefully.

Beyond that, I don’t yet have many answers. But I do have some thoughts on some of the questions that senior insurance executives should be considering. I’ll divide them between those with shorter term implications and those with longer term implications.

Questions with Shorter Term Implications

• If we haven’t triggered our remote working plans yet, why haven’t we?
• How do we best help our people manage this major change to their working (and personal) lives?
• How will we plug the service gaps that will arise if a large proportion of our workforce falls ill at the same time?
• How long will remote working be required? Governments around the world seem to be choosing initial quarantine periods of 14 to 30 days, but how long are they really likely to last?
• Given my last answer, were our remote working plans designed for the length of time we’re now looking at? Or do they need to be re-visited?
• Until recently we had several ‘critical initiatives’ on the go. Which ones are still critical, and how do we ensure that they keep moving at pace?

Questions with Longer Term Implications

• Do any of our product wordings need to change to deal with the return of Covid-19 in future years, or possible future pandemics? What about other potential ‘black swan’ events?
• Do we need to reduce our reliance on people being co-located, by re-considering office infrastructure strategies and the degree of ‘remote working as standard’?
• Do we need to reduce our reliance on people altogether, by increasing automation?
• What can we, as an insurance company, do to help the world avoid a similar crisis in the future?

Note that questions having longer term implications doesn’t mean you shouldn’t start considering them now. Indeed, one impact of the coronavirus is that executives will be unable to do some of the things they normally do, freeing up time to focus on strategic thinking. So even Covid-19 brings opportunity to those who want it.

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But I’ve not yet thought about this for long. Do any other key questions spring to mind?