The outbreak and spread of COVID-19 has created a global health crisis which has had far-reaching consequences. Health systems are facing mounting strains and formerly busy cities are now deserted. In turn, the spread of the disease, lockdown and uncertainty has led to economic and market turmoil.
For insurers specifically, the fallout from the COVID-19 outbreak has seen a peak in health, travel and business interruption claims in particular. This comes at a time when insurers are facing their own internal challenges due to the impact of COVID-19. Arguably, however, the current crisis could be a turning point for the insurance industry by affording insurers the opportunity to demonstrate their intrinsic value to society. The international response has so far shown much promise in this regard. In China, for example, one major insurer has created an emergency fund, coupled with a rapid claims process and waiving excesses. In Singapore a major insurer has doubled benefits paid to frontline healthcare workers hospitalised on account of COVID-19. In the United States, one insurer has announced that its customers will be entitled to access medically-supervised testing.
The response of Australian insurers is due to come under the spotlight this week, during two days of hearings before the House of Representatives Standing Committee on Economics. The hearings, which are due to commence on Tuesday morning, will hear from both the general and life insurance sectors. The Insurance Council of Australia (represented by CEO Rob Whelan) is scheduled to appear first, to be followed by the Australian Financial Complaints Authority. Allianz, Clearview, AIA and TAL Life will also appear on Tuesday, and Youi, Suncorp, IAG, and QBE are scheduled to follow on Wednesday. Travel insurance is likely to face particular scrutiny after thousands of policyholders have had to cancel planned travel following border closures and restrictions on movement. Landlord insurance, life insurance and business interruption insurance and also likely to be topical.
There is much to be lauded in the insurer response to date. Some insurers have started to offer premium relief to customers suffering financial hardship. Insurers have also indicated rebates / discounts will be offered to motor vehicle insurance policyholders (prompted largely by the presence of fewer vehicles in transit and accordingly fewer claims). Similar terms are being offered to some home insurance policyholders who have suffered financial distress. One insurer is also offering free roadside assistances to first responders in the medical and law enforcement fields (irrespective of whether or not such persons are customers). The positive collective response to the recent devastating bushfires across Australia suggests insurers are well-equipped and intent on prioritising the needs of customers.
Societies, suffering distress, will continue to look to insurers for assistance and how the industry responds to the current crisis is likely to play a pivotal role in dictating public perception for many years to come. The response so far, is promising, but is likely to face continued scrutiny as the impacts of COVID-19 continue to evolve and expand.