COVID-19 (coronavirus) has presented insurers of all types with a difficult conundrum – they obviously want to enforce existing policy terms & conditions and avoid an avalanche of claims. But insurers who stay shielded by policies’ “fine print” could take a major hit to their brands and lose customers. And industry inaction could trigger unwanted government intervention.

Let’s take a quick look at what’s currently covered and the implications for insurers.

P&C Insurance

Many “non-essential” businesses were forced to close, which basically stopped their income. Now many are unable to cover expenses and stay open. Business interruption coverage for a traditional P&C policy previously offered coverage, but since the SARS pandemic in 2003, most standard policies exclude epidemics/pandemics.

It will be necessary to review each case to determine if COVID-19 has caused contamination or other effects that render a property uninhabitable, or otherwise unfit for its intended use. States have withdrawn legislation that would have forced insurers to provide business interruption coverage for COVID-19 losses, but the federal government could still intervene.

Travel Insurance

There could be coverage in some instances – travel policies have a “coverage for any reason” (CFAR) option. Insureds who have contracted coronavirus and cannot go on a scheduled trip are generally covered. The Wall Street Journal notes that one carrier adopted a customer-centric approach. Allianz Global Assistance said in early March that for a limited period it was accommodating claims for trip cancellation and emergency medical care for customers who became ill with the coronavirus, as well as cancellation claims for customers traveling to certain affected areas.

Workers’ Compensation

Mandates for coronavirus coverage by health insurers (coverage for testing, visits to emergency rooms without deductibles or co-pays) have been issued by at least ten states. “These measures, if expanded to more states, could have the impact of limiting claim activity in the workers’ compensation market in those cases where only testing or quarantine are necessary,” according to The National Council on Compensation Insurance (NCCI).

Impact on Insurers

Coronavirus is a large-scale, global event that will change the way we live and do business. Can insurers partner with insurtech companies, to create innovative new models and policies? How will insurers prepare for a likely second wave of the virus? These are just some of the questions to consider, but one thing is clear: the way forward includes a flexible policy administration system and extensive digital capabilities…

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