A survey has found that over half of insurance professionals believe that the government cannot continue to serve as an insurer of last resort when it comes to covering the vast number of COVID-19-related claims.
Some 476 Chartered Insurance Institute (CII) members gave their opinions on the matter, and it was revealed that 54% of the respondents indicated that they do not feel that the government can continue to provide a safety net for everybody financially impacted by the pandemic.
“Ultimately, no government can save every business,” said CII chief membership officer Keith Richards.
Richards added that the coronavirus acted as a catalyst for the rise of trends such as online shopping, and that the government realistically cannot have a “zero failure” regime that prevents every business from closing.
“However, only the government has the tax raising powers to raise the hundreds of billions of pounds needed to transition to a post-COVID economy in an orderly way, that avoids the kind of suffering that happened, for example, in the 1930s,” he said.
Although the government cannot sustainably be an insurer of last resort for every individual, Richards commented that it can still offer a wider, safer net than insurers can raising money through voluntary premiums.
“The key is for the insurance profession to define roles and responsibilities in a clear and sustainable way, so that investors can have confidence and the economy can rebuild,” he said.
CII is calling on both insurance professionals and the government to focus on three areas to reduce the need for legal proceedings in business interruption insurance cases, as well as to raise public awareness on what insurance can and cannot cover:
