How COVID-19 is shaping the future of insurance
Most businesses had no cover for the biting effects of the pandemic – but now insurers are bent on ensuring that does not happen again
Insurance companies are taking steps to create a world where insurance policies that cover virus outbreaks become the new normal.
The coronavirus pandemic has exposed loopholes in the insurance industry, with many businesses stripped bare.
There are not many pandemic-proof policies on offer on the open market. This has left business exposed and many firms have taken a big hit with the outbreak of disease.
Now, however, insurance providers are planning to offer businesses ways to insure against disruption and loss in the event of similar catastrophes in the future.
Although it is likely that these instruments will be expensive, they should cover the gap in productivity caused by pandemics and localised outbreaks of disease, which until now has not received much attention.
Relief in the lockdown
Millions of businesses across the world were left with no defence as governments successively imposed lockdowns in the areas where they operated. However, this could change if another pandemic should occur next year, as some insurers are already making arrangements.
A tech firm called Machine Cover has announced that from next year it will offer reliefs during lockdowns.
The company will monitor businesses such as restaurants, department stores, hairdressers and car dealers and will pay out immediately there is a drop in traffic to these businesses.
The founder of Machine Cover, Inder-Jeet Gujral, believes that serious businesses must prioritise such policies post-COVID-19.
“This is the type of coverage which … businesses thought they had paid for when they bought their current business interruption policies before the coronavirus pandemic,” Gujral told Reuters.
“I believe this will be a major opportunity because, post-COVID, it would be as irresponsible to not buy insurance against pandemics as it would be to not buy insurance against fire.”
Pandemic proofing
Most businesses and companies have not been in the market for pandemic-proofing, since such wide outbreaks of disease are not common. Indeed, neither had most insurers made any plans for an event of this sort.
Now, however, the situation is changing in response to the evident effects of the pandemic on businesses.
Businesses are always looking for ways to reduce risk and pandemic proofing is likely to be taken more seriously from now on.
A report by the consultancy firm Capgemini said that demand for usage-based insurance has soared since COVID-19 broke out.
Capgemini said more than 50% of the customers it surveyed for its World Insurance Report wanted usage-based policies.
E A Alanore
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