Excerpt from Crisis Manifesto: How insurance will change post-COVID

We’re taking a look at the insurance industry to understand the short-term realities and long-term implications and possibilities of COVID-19.

In our Crisis Manifesto series, we’re taking a look at a number of different industries to understand the short-term realities and long-term implications and possibilities of COVID-19. This is an excerpt from our Innovation Opportunities in Insurance trends report.


Life after Coronavirus won’t be the same. This isn’t a temporary blip on the world’s radar and then everything goes “back to normal.” There will be a recovery, but that doesn’t mean things will return to the way they were. Many industries will be significantly impacted, with disruption accelerating and new opportunities emerging.

Immediate impact on commercial lines:

  • Event cancellation. There has been a wave of cancellation and postponement of numerous events, from concerts to large-scale sports events like the Tokyo Olympics, which is already triggering class action lawsuits. Lawsuit Over Refunds for Canceled Events Targets MLB, StubHub and Ticketmaster: The divide between “canceled events” and “postponed events” could have significant repercussions. Not all events are insured but those that are can expect a rise in claims and possible litigation over denial of coverage.
  • Business Interruption: There’s a tidal wave of litigation coming due to the multitude of denied and disputed claims — analysts at Morgan Stanley have predicted that increased litigation levels will emerge from the Coronavirus pandemic and its accompanying economic downturn. In particular, Business Interruption will be a major issue, where disputes and lawsuits are mired in whether the pandemic can be considered a bacteria, a fungi, or a virus, and just how to define the “damage” caused, and political pressure on jurisdictions to come through with legislative solutions, both retroactive and forward-looking. There’s clearly uncertainty around whether or not insurers and reinsurers would be held to account for business interruption insurance and if they are, this could be cataclysmic in pulling away capacity and would have ramifications for other lines of business. The insurance industry will need to think deeply about how to position itself and how to respond to future economic and health crises in the form we’re seeing today, going forward. 
  • Trade credit insurance. Many invoices will go unpaid due to worsening economic conditions and rising unemployment rates. Depending on the level of insolvencies, and on the success of the mitigating actions taken by insurers, claims ratios could inch closer to the mid-to-high 80% levels seen during the financial crisis of 2008-2009, according to AM Best. Incurred losses and liabilities can be significant.
  • Workers’ compensation. As businesses reopen, worker safety becomes a priority and a concern for employers, especially when it comes to front-line staff. If an employee claims he or she contracted COVID-19 at work, given what is known about this disease, this can potentially mean a costly liability for employers. Some of these claims are already making their way through courts in the U.S. and, given the backlog, it is possible the uncertainty will persist until the issue gets settled by regulators.

Immediate impact on personal lines:

  • The impact on personal insurance claims has been less severe, with most insurance gaps exposed within commercial lines. The downturn seems to have a positive side: people are more inclined to shop to save, less likely to engage in risky behaviours, they are driving less, and so there are fewer car accidents. Headwinds include widespread uncertainty regarding the kind of recovery we’re looking at as people’s finances take a hit, which may mean an uptick in deferrals, lower premiums, fewer rentals and limited new business.
  • In travel insurance, given the state of the travel industry, new business is expected to slow down significantly, even if insurers were quick to adapt and offer refunds on cancelled policies, there’s still a compounding negative effect.
We’re taking a look at the insurance industry to understand the short-term realities and long-term implications and possibilities of COVID-19.

COVID-19 has exposed enormous innovation gaps in the insurance industry.

In order to survive, big insurers need to behave more like startups. They need to build ventures in-house, partner with tech innovators, adapt quickly and invest in solutions.

Immediate impact on life and health insurance

The heightened awareness of mortality and health risks amidst the pandemic and widespread job losses is already leading to a surge in demand for life and health insurance products. However, even if more people are on the market for life and health insurance, they are most likely shopping for these products digitally, looking for comprehensive coverage and better rates. This can mean additional pressures on insurers serving vulnerable populations such as seniors to come up with products that make sense, while mitigating risks associated with a potential rise in claims.

Life insurance in particular is a growing and thriving InsurTech ecosystem well positioned to create value, especially in developing markets. Health is top of mind, globally, and even if it may be too late for COVID-19 coverage, consumers are already thinking about the next pandemic. Improved collaboration between the InsurTech ecosystem and the life insurance industry will lead to new efficiencies when it comes to policy administration, underwriting, reinsurance and sales channels, accelerating innovation in 2020 and beyond.

This is an excerpt from our report on the innovation opportunities in insurance. Please read the full report here: https://highlinebeta.com/insurance-after-covid-report

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