Mixed reaction to insurers’ Covid-19 response

Belgian risk managers taking part in our Risk Frontiers Europe survey were split on how insurers have reacted to the crisis. Gaetan Lefèvre, head of professional ethics, risk and insurance management at John Cockerill, as well as newly-reappointed vice-president of Belrim, said insurers “clearly have not responded to the Covid-19 crisis and have closed the door on the claims”. He acknowledged, however, the support from brokers that have asked insurers to agree new terms on premium payments. “Two weeks after the start of the crisis, a lot of companies – including mine – had a cashflow problem. My FD asked me to find a way to limit the outflow of cash in terms of premiums. With the support of the broker, we found a way to split the premium payments,” he said. Sabine Desantoine, insurance risk manager at ING and immediate past president of Belrim, was slightly critical of insurers on this issue. “When I compare how the financial world has reacted, comparing the banking sector with insurance, we very quickly had an agreement between the banks, government and regulator to allow companies credit, not only companies but also for individuals – six months credit for mortgages, consumer loans and business loans,” she began. “It took another month for the same to happen with the insurance companies and then it was mostly on personal lines. For companies, agreements were made on an individual basis and it was based on your insurer relationship,” she added. Carl Leeman, chief risk officer at Katoen Natie and vice-president of Belrim, said he has not needed to ask for premium payment delays but heard from a couple of insurers that they are prepared to be quite flexible. “They are looking client by client but generally speaking they were able to defer payments or split payments. They were working to find solutions,” he said. Mr Leeman said there are dangers, however, if all insureds ask for deferments. “It could be tricky – I know insurers are sitting on a pile of cash but if clients don’t pay their premiums, insurers could get into liquidity issues. So I think it is always very dangerous to start encouraging people not to pay. It has to be monitored case by case. I think it is very difficult to introduce general rules in such a situation,” he said. Natalie Vandenbroucke, compliance, risk and insurance officer in Belgium, Luxembourg and France for the Royal BAM Group, suggested brokers need a global checklist and action plan for customers to use, and should use their scale to postpone premium payments. She think insurers need to accept postponed premium payments and extend temporary covers during the crisis. In addition, she urged them to not take an opportunity to increase premium and/or restrict covers, while being fair and choosing to prioritise long-term relationships with clients. Mr Leeman added that Katoen Natie has pandemic coverage in place and he thinks captives could provide a solution to this risk going forward. “It was on our radar, so we had quite broad coverage for pandemics. I think captives will be used more and more in the future to provide, among other things, pandemic coverage,” he said. Mr Leeman disagrees with calls for insurers to pay out on business interruption claims when the wording had specifically excluded pandemics. He argued that, if companies had wanted cover, they should have thought of it earlier. “If you only see what is not covered when it happens, then you are not doing your job properly,” he suggested. “You should know how your coverage will work. You cannot ask for fire insurance when your building is burning. When it comes to a pandemic, a lot of policies exclude pandemics,” he said. Julien Rouaud, corporate risk manager at Agfa agreed, adding: “I think it (the pandemic) will force companies to look inwards and look at the gaps. They will want more agile products that will respond.” He believes that insurance products will have to change in the aftermath of Covid-19. “This crisis highlighted the exclusions and limitations of insurance products. Banking may have mitigated the crisis this time but what about next time?” he said. Ms Vandenbroucke suggested the solution lies in insurers and brokers communicating transparently on risks and covers. Mr Lefèvre suggested the true impact of the crisis will be felt by insurers when it comes to the next renewal season ahead of 2021. “So much premium pricing is based on company turnover and that has dropped dramatically this year for so many companies. I am very sure it will impact renewals,” he said.

Mixed reaction to insurers’ Covid-19 response

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