As the COVID-19 pandemic continues to spread, with medical experts warning that the world faces 18 months of disruption, insurers are having to look to their own operations, quite aside from the debate over coverages.
This week has seen a string of insurance firms and associations having undergone disaster recovery trials with staff told to stay at home to test the ability of the organisations to operate without any physical presence in their offices.
These trials will continue next week with a number of London market organisations ready to prepare for the worst.
With a flight ban into the United States from the Europe Union set to come into force this evening many travellers have been rushing to their insurance policies to find that they are not covered while the events and hospitality industry is warning of dire straits as event after event falls victim to the virus.
The only good news for the organisers is event cancellation insurance is most likely to pay out compared with other policies. However, travel, business interruption, workers’ compensation, and general liability policies could also be affected.
Insurance experts say the most apparent impact for insurance companies in the short term will be in the reporting of realised or unrealized gains from equity market fluctuations and movement in interest rates. This will be partly mitigated by higher underwriting revenues because of hardening of insurance markets globally.
There is a view that the coronavirus is to be largely an economic event for now, which will not result in significant underwriting losses for the P&C industry overall. However, some lines such as events cancellation and travel insurance will experience an increase in claims.
The concern for many is that as national governments seek to restrict the movement of people the response should a major loss or natural catastrophe occur in the coming months will be severely limited. The inability to move staff internationally to the site of such events may test the industry when the stakes are highest.