The insurance industry must adopt a more responsible and business-sensitive approach to the COVID-19 pandemic, or it risks undermining the trust and loyalty of customers.
That is the message from Airmic, the UK association for risk and insurance professionals.
Many businesses face an existential threat from the COVID-19 pandemic and the actions governments have taken to contain the spread of the virus, and need support from their insurance partners, Airmic said.
It called for insurers to avoid last minute and poorly communicated changes to underwriting policy, including cover limits and exclusions, and to work constructively with customers to resolve disputes.
It also called for insurers to be flexible in providing cover and rebates for reduced risk exposure, in light of difficult market conditions, and commit to avoid COVID-19 exclusions on directors and officers policies. Airmic also advised insurers to provide business Interruption coverage that is tailored to modern business risk profiles, which could include the increased use of parametric tools to protect cash flows.
Airmic also supports the creation of national catastrophic pooling and reinsurance mechanisms in the UK, such as the existing pools for terrorism and flood. However, it warned such mechanisms must be embedded in broader national and international risk strategies and should themselves be pooled to ensure the efficient use of capital.
John Ludlow, chief executive at Airmic, said the insurance industry is at a critical juncture. “Member surveys suggest the hardening market is already forcing businesses to look at alternative transfer options, and an ill-judged response to the pandemic could prove the trigger,” he said.
Ludlow acknowledged the challenges insurers themselves face, but stressed it is in the interests of all parties that insurers and their clients work together openly, constructively and collaboratively. “For years, insurers have said they want to be business partners with our members. Now is the chance to put words into practice,” he said.
Airmic, COVID-19, John Ludlow