The outburst of the ongoing Covid-19 crisis all influenced individuals, communities, even businesses and the global economy. Insurance firms are worth mentioning when it comes to the affected companies or businesses. As they faced major challenges that were not witnessed in advance. These businesses are now facing different claims and inquiries in different sectors, and more and more are expected to face them.
Such inquiries and claims are mainly related to policies for health and life insurance. However, to make things clear, most of the insurance sectors have been affected by Covid-19, but those sectors mentioned below are the most affected sectors of the insurance industry.
Health Insurance
It is a direct insurance policy that is primarily used to provide policyholders with support for health issues. Such policies bear crisis-related clauses, such as the covid-19 pandemic, which currently faces unprecedented challenges for insurers.
The long-lasting financial impacts that will differ depending on the number of infected cases from one country to another will be felt by health insurance policy providers.
Insurance policy providers were stable enough before the crisis to set adequate reserve levels considering the incoming premium, but all of this was disrupted when covid-19 broke out and the insurers had to think creatively to reduce their financial obligations and increase their income to cover the claims.
In order to be proportional to the possible risks that could appear during the new wave of covid-19, they had to increase health care and life insurance premiums. By taking a sample of individuals who were infected by the virus, they had to calculate the minimum coverage and make it the standard coverage for anyone infected by that virus.
It is worth mentioning in this regard that some insurers have learned the lesson since the SARs broke out in 2003 and issued insurance policies that exclude them from being liable for any coverage for losses due to epidemics/pandemics.
For example, business interruption policies require insurers to compensate for any loss that occurs within the limits of the amount of coverage in the event that material damage has occurred to one of the assets or operations of the organization. Consequently, because of the pandemic, the insurer is not responsible for providing coverage for losses that have occurred to the company or organization.
There are other types of insurance that were impacted due to the Covid-19 pandemic in addition to the health and life insurance policies.
Firstly, insurance for trade and credit:
It is the type of insurance that offers companies coverage against debts not paid by their customers or suppliers. The value of this market may reach $11 billion USD.
In addition, many debtors will not be able to repay their debts in time because of the global crisis and the impact on the global market. At the same time, most of the insured will ask the insurers, according to their policy wording, to pay them the value of the debts or the coverage amount.
Secondly, Compensation Claims for Workers:
Due to the deteriorating global market conditions that occurred due to the pandemic and the compulsory quarantine applied in many countries, many businesses fired their employees. For that very reason, the insurance coverage against these claims will be the responsibility of a lot of insured companies.
Insurers loss will turn into profit
After all that loss has occurred to the insurers in the medium and long term, despite this significant pressure, all that loss may turn into profits only for those who will continue to go on. Because in such circumstances, many people will think about insurance benefits for their various sectors-be it health or life insurance.
It is, however, noteworthy that the higher the amount of the claim, the higher the value of the insurance premium will be calculated in the insurance policies issued.
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