The coronavirus pandemic may have put the world at a standstill, but the gears of the insurance sector continue to turn – what with increased risks, as well as opportunities, presented by the global health and economic crisis.
In an interview with Gallagher Bassett government and long-tail claims general manager Scott Newland, the industry stalwart offers insights as to how COVID-19 is impacting various lines of business, and how the current situation can be used to an organisation’s advantage.
Property and business
“It is likely that there will be a shift in the types of property claims that come through,” said Newland. “There will be a potential increase to business interruption and event cancellation claims, particularly under government statements of cover, as a direct result of the cancellation of trade, arts, and sporting events.
“However, due to the decreased underlying volumes and given the economic impacts to customers, businesses will look to reduce costs by consolidating assets and inventory into fewer buildings, decreasing the overall frequency of claims across the portfolio.”
Aside from this potential change, the Gallagher Bassett official also pointed to how insureds can use this time of lower asset or site usage as an opportune window to have any minor repairs or maintenance carried out. Needless to say, site surveys and walkthroughs will have to be conducted before reopening following an extended period of closure.
Motor
With less people on the road, the number of motor-related claims has gone down as projected.
“Further to this, with border closures and people encouraged to stay within their local communities, it is expected to keep vehicles off highways, decreasing the volume of severe or high impact claims, or those related to driver fatigue,” explained Newland.
“As we continue to have COVID-19 restrictions in place, we will continue to see a reduction in motor claims frequency from businesses and individuals.”
Just like with property, organisations and government bodies are encouraged to take advantage of the lower motor vehicle usage in their fleets and go ahead with any minor repairs for driveable vehicles. They can also use this time to initiate activities that can assist with bringing claims to finalisation given body shops’ increased capacity.
Liability
Naturally, lockdown restrictions have meant reduced claims in this area as well, but Newland’s camp is bracing for a sharp rise in slips, falls, and other liability claims as people return to retailers and other public places.
“Additionally, the pandemic brings an increased risk of allegations that organisations and government bodies have failed to put sufficient risk management strategies in place to protect against infection (for example, personal protection equipment, sanitisers, physical barriers, and proper physical-distancing measures),” noted the general manager.
“Government bodies and organisations’ priorities during this period is two-fold. First, they need to look at alternate dispute resolution to bring existing claims to closure.”
Newland said they see a “welcome increase” in the use of technology to efficiently and quickly resolve disputes, the number of which is anticipated to go up in the current environment.
He went on to state: “Secondly, it may seem straightforward but prepare your organisation or firm for reopening, ensure all staff safety training is up-to date and relevant.”
For instance, a risk assessment of one’s business or site must be completed. Also, to prevent incidents from occurring, safety and security protocols should be top of mind, stressed Newland.
As for medical-related liability, the insurance veteran said new risks which have been introduced to the healthcare system will likely drive an increase in new claims. The closure of elective surgery, however, is expected to result in a downturn in the frequency of claims originating from these procedures.
Accident and health
“There are a number of high-risk portfolios under accident and health which will carry the burden of the impacts of COVID-19,” added Newland. “With amateur and professional sports paused, planes grounded and borders closed, people working from home, there will be several wide-reaching impacts.”
According to the executive, these are an initial tsunami of claims for cancellation of trips; a significant decline the longer international borders stay closed; and personal accident claims potentially falling sharply as a result of sporting associations and volunteer organisations having to withdraw activities.
“The priorities for any business,” said Newland, “are to understand your exposure, work closely with your claims partners to streamline claims activities to expedite the claims process to best support claimants, and to anticipate obstacles relating to claims and document a plan to mitigate them.”
