Reinsurer Swiss Re has noted that the ongoing coronavirus (COVID-19) outbreak is introducing “a range of new complexities” for insurers in terms of claims, underwriting, policy terms, and more.
These are compounded by the significant uncertainties that continue to surround the virus, such as the factors affecting mortality and infection rates.
One key element that remains uncertain are the conditions that determine how many people an infected person will transmit the virus to in the susceptible population.
According to Swiss Re, the effective rate of reproduction will differ between countries and vary over time as governments implement a range of measures from social distancing to full lock downs of affected regions.
“The quicker governments react with interventions the more likely infection rates can be brought under control and the higher the likelihood that the mortality rate will be reduced,” the reinsurer stated.
The mortality impact on life insurance portfolios will be similarly difficult to assess,” analysts added
Early estimates for the fatality vary widely by geography and age bands, with the additional difficulty of adjusting for deaths among those who are still infected at the time of observation, as well as the impact of under-reported symptomatic and asymptomatic cases.
Swiss Re says that it has already begun applying lessons from its experience in Asia to other markets, and is working closely with clients to help them understand what this means for underwriting and claims.
The company plans to offer a dedicated COVID-19 underwriting guidance in its Life Guide shortly, including support for current and past infection as well as guidelines for possible exposures.
It’s also working with clients on other ways to help manage risk including dedicated questions around COVID-19 and some temporary changes to existing practices which might leave insurers exposed to anti-selection.
“But most of all, should a policyholder be diagnosed with a condition which meets the policy terms and conditions we will pay the benefit,” Swiss Re concluded.
“This is why insurance was invented. It’s why our industry exists, and we stand ready to pay valid claims when our clients and policyholders need it most.”