Geneva Association examines pandemic-fuelled fundamental changes for insurance

The Geneva Association, a global association of insurance and reinsurance company CEOs, currently headed by the association’s chairman, Intact Financials’ CEO Charles Brindamour, has surveyed more than 8,000 insurance customers around the world to learn about their experiences with insurance companies during the COVID-19 pandemic, and to provide an updated report on their perceptions about risk and their expectations of insurers going forward.

The report, entitled The Global Risk Landscape after COVID-19: What role for insurance? looks at a number of trends and offers recommendations for insurance companies to play an expanded role going forward.  The report says stakeholder expectations have risen notably. More, they say accelerated digitalization, “Big Government,” the pivot to sustainability and the shift to remote working, in that order, are all likely to have the most significant impact on insurers in the future.

Governments, they say, have assumed an unprecedented role during the crisis, by offering emergency stimulus measures, some of which may become permanent. “These programs may negatively impact insurance demand by fuelling the perception that governments will intervene and provide disaster assistance in the event of a truly disastrous pandemic,” they write, adding that governments might also be tempted to condone higher levels of inflation, which would adversely affect insurers’ future claims, current policies, the adequacy of their loss reserves and the demand for long-term life insurance.

Remote working 

The survey of 7,200 retail insurance customers and 800 small commercial insurance buyers, coupled with 25 interviews from industry experts and executives further found that more than 50 per cent believe remote working is likely to endure after the pandemic. Almost two-thirds of retail customers are concerned about the risk of extended hospitalization and the resulting loss of income or wealth. Among small business owners, furloughing employees, deteriorating financial positions and the need to close down were the highest-ranked post-pandemic concerns.

“More than 40 per cent of retail customers consider health and life insurance as more important post-pandemic, though only one-fifth intend to buy additional coverage. More than 50 per cent of small business owners value business interruption, group life and health and liability insurance more highly. Just over one-quarter expressed their intention to purchase additional insurance,” they add. “Other priorities, i.e. insurance not being top of mind, was given as the main reason for not purchasing additional insurance despite valuing it more highly.” 

Commercial customers’ expectations 

The report adds that retail and commercial customers also expect more comprehensive policies from their insurers to cover future unknown disruptions. The report and survey respondents also call for simpler policy wordings, as well, and more prevention services. “More specifically, small business owners expect more comprehensive business interruption policies,” the report states. 

“COVID-19 has demonstrated that the economic losses from a global pandemic are uninsurable. For some risks there is a gap between what insurers are able to insure and what clients and society expect them to cover,” the research brief concludes. “In order to avoid false expectations, insurance contracts have to be much more simple and accessible so that customers know which risks are covered. This will require insurers to clearly communicate what they promise and keep their part of the bargain.”