The crisis caused by COVID-19, started out as a health emergency but has managed to affect companies worldwide and across industries, severely affecting the insurance industry, not only from an economic point of view but also operationally.

As a result, companies throughout the insurance industry have suffered the effects of the pandemic internally with regards to business and continuity of employment, challenging short and medium term prospective, and externally in connection with customer service.

For this reason, it is essential that companies assess all possible implications and effects of this unprecedented health crisis not only in relation to their corresponding policies, coverage and exclusions, any potential contingencies that may affect the business, but also the consequences, as the approach and coverage will vary from one insurer to another.

Therefore, at this stage we are faced with the challenge of examining all aspects of the above and updating our crisis management plans accordingly, so that, where appropriate, we are in a position to take all necessary steps to safeguard business continuity.

INSURANCE TYPE ANALYSIS

First and foremost, we must address the main issues raised by companies regarding the various insurance typologies and potential claims

The contingencies by which most companies will be affected by are the following:

• Health Insurance: concern arises as to whether or not healthcare will be covered by insurance in the event of symptoms related to the virus, as well as the coverage of potential treatment.

• Pecuniary Loss Insurance: companies also need to analyse the scope of coverage as a consequence of interruption to business, both for closure and for delays and interruptions, application of contractual penalties or the fact of incurring extraordinary expenses as a consequence of the pandemic.

• Civil Liability Insurance: civil liability is an area of greatest concern to most companies as they evaluate their possible liability due to a lack or insufficiency of due diligence when implementing the relevant and appropriate prevention measures.

• Payment Protection Insurance (PPI): at this point there are doubts as to the impact arising from temporary work disability or unemployment. In addition, questions may arise about possible compensation in the event of death or temporary, permanent or serious disability due to the virus.

• Cyber Liability Insurance: taking into consideration the present work environment where the majority of employees are telecommuting, protection regarding cybersecurity is a must, as any cyberattack may cause substantial losses, acquiring particular significance for the financing industry where online transactions have experienced an exponential growth.

CONSEQUENCES

The first task for a company to carry out, along with its advisors, is to review its contracted insurance coverage and, consequently, determine whether casualties caused or in any way derived from the pandemic are excluded or not, as most policies exclude this type of claim.

In relation to the policies that include these casualties, these will likely fall into one of the following categories:

• Halting of operations: the insurer will likely compensate with a fixed daily amount, as detailed in the policy, for each day that the business is shut down, up to the maximum number of days covered by the policy.

• Loss of revenue: the insurer will likely compensate for the expenses incurred by the company that will not be recovered as a result of the pandemic, and until the business rebounds and reaches its normal revenue.

FUTURE INSURANCE

Until the general uncertainty that we are experiencing has come to an end and life and business goes back to normal, it is paramount that companies acknowledge that the present circumstances are the actual and ultimate reason they subscribed to insurance agreements in the first place, so that they provide sufficient support and means to safeguard your business’ continuity and survival. Therefore, this is the ideal moment not only to assess how to mitigate the impact of all immediate contingencies, but moreover to review your current insurance framework as an efficient back-up system in the light of any future similar events, so that you emerge more resilient than before.