The COVID-19 pandemic is not the only factor giving insurers a difficult time this year, according to the latest Taylor Fry insurance market overview.
RADAR, its latest review, has revealed a mixed outlook as insurers grapple with the COVID-19 crisis, climate change, cybersecurity, mental health, and restoring customer trust.
“In RADAR, we discuss the impact of COVID-19 on insurers, which is significant, although experience varies by class of business. Travel insurance has been hit particularly hard but, in time, most lines of business are likely to experience adverse effects, as poor economic conditions and increasing community hardship constrain premium increases and apply ongoing pressures on claims,” said Taylor Fry principal Kevin Gomes.
Insurers have been focusing on COVID-19 over the past six months, bringing to light cybersecurity issues as businesses go digital.
“Recent media attention has brought cybersecurity into sharp relief as essential to most business models,” said RADAR contributor Win-Li Toh.
“A particular issue is the potential in several classes of business for ‘silent cyber’, where an insurer may have to pay claims for cyber-related losses under a traditional insurance policy not designed for the purpose. Insurers still have a lot of work to do in fully understanding cyber risks and pricing accordingly.”
RADAR also expects an increase in primary and secondary psychological workers’ compensation claims due to changes to work demands, shifts in working arrangements, and COVID-19-related restrictions.
Meanwhile, climate change remains a significant risk due to its ongoing and far-reaching implications.
“Catastrophic weather-related events cost insurers more than $5.2 billion over the year, including property damage claims from the unprecedented summer bushfires, January hailstorms, and February storms,” Gomes said.
