Interview, Fireside Chat
How the Insurance Industry Is Reacting to COVID-19
- Global insurance lines of business and associated investments are expected to be affected by the current situation, though the industry maintains the capacity to honor policies and remain operational.
- Auto insurance claims activity is projected to decrease significantly, leading to premium rebates, while commercial lines are experiencing a substantial increase in claims.
- Claims are anticipated for specific pandemic or event coverage (e.g., 2020 Tokyo Olympics), whereas standard business interruption policies typically excluding viruses and pandemics will likely incur no claims.
- Worldwide healthcare system reviews are expected to drive changes in policies, coverage, health care delivery, and regulation, requiring the insurance sector to adapt.
- Industry consolidation is predicted as a result of benefit and cost dynamics, alongside a strategic shift toward technology to reduce selling, administration, and claims costs.
- Telehealth is identified as a cost-effective solution for non-critical issues, with the industry committed to embedding it in policies to drive adoption.
- Investment earnings are likely to remain depressed, compelling insurers to reduce costs and potentially increase premiums to compensate for lower investment income.
- Modestly higher premiums may persist until interest rates rise, offsetting the inability to earn high returns on illiquid asset classes where insurers currently earn an illiquidity premium.
- Technology adoption will accelerate over the existing 15-to-20-year trend, increasing online policy processing and reducing the reliance on door-to-door agent sales.