In addition to payment relief to some customers, insurance companies are maintaining staff and supporting national pandemic relief efforts.
Immediate Customer Solutions
Many insurers are offering payment relief. For example, auto insurers have returned $10.5 billion so far to customers’ pockets around the country through premium relief. Customers who need payment relief or are looking to file a COVID-19 related claim should contact their insurance professional or go to their insurer’s website to find out what options are available to them.
Despite lower premiums and higher loss expectations during the pandemic insurers are keeping employees employed and serving customers. Many insurers have pledged to make no layoffs during the ongoing crisis; and insurers are implementing innovative solutions to carrying out daily operations while respecting social distancing.
Insurers support the COVID-19 Business and Employee Continuity and Recovery Fund. They have pledged more than an estimated $220 million (according to Triple-I/Insurance Industry Charitable Foundation) in donations to the national and local organizations fighting the pandemic on the frontlines. Funded by the federal government and operated by a special federal administrator, the Recovery Fund would facilitate the distribution of federal funds and liquidity to impacted businesses during this time of incalculable business interruption.
The Insurance Information Institute (Tripe-I) points out that the insurance industry in the U.S. also faces several challenges during the crisis:
• Some lawmakers want to void policy exclusions and pay out retroactively for non-existing coverages which would threaten the solvency of some insurers. Several reasons are offered:
• Only a handful of business interruption policies cover communicable disease contamination; very few U.S. businesses purchase: so there has been little premium generated to fund these losses
• Rewriting contracts after they have been agreed to is unconstitutional – Article I
• Requiring an insurer to pay for losses it never insured would cause irreparable harm to the industry
• Mandating business interruption payouts would eliminate the surplus set aside for covered claims in a matter of months.
• Overall insurance claims will increase. Workers compensation insurers have exposure in healthcare, among first responders, and retailers who use delivery services.
• Insurer premium revenue will decrease. More unemployment, less manufacturing, and less economic activity overall will lead to a reduction in premiums.
• Insurer investment income will decrease. P/C insurer investments are largely in fixed income products, yet their equity portfolios and the continued low interest rate environment will reduce insurer investment income, a key revenue source.
• Beyond the COVID-19 pandemic, insurers are preparing for more severe natural and man-made catastrophes — tornadoes, hurricanes, wildfires, cyberattacks. These covered catastrophes continue to increase in terms of overall loss costs.