The Global Federation of Insurance Associations (GFIA) has said that the continued financial stability of the re/insurance industry is vital as the coronavirus (COVID-19) pandemic progresses.
Without stability, the GFIA argued that insurers may not be able to continue to respond to the crisis or to honour their obligations to customers under existing policies.
It added that, where coverage for pandemics and other causes of loss were not included in existing policies or reflected in premium payments, requiring insurers to cover those losses retroactively could seriously threaten the stability of the global insurance industry.
Analysts noted that events such as fires, motor vehicle accidents and natural catastrophes do not stop during a pandemic, and insurers are at the same time require to manage their financial strength in order to meet customer guarantees, whether they are related to the pandemic or not.
As such, the GFIA believes that retroactively changing the terms of policies would not be an appropriate way to address the large-scale financial impacts of the COVID-19 pandemic.
In fact, it said such actions could threaten the entire financial stability of the insurance industry and significantly undermine insurers’ ability to pay other types of claims, in turn exacerbating the economic impact of the crisis.
In addition, the GFIA urged governments to act on requests from their national markets for exceptions to allow re/insurance companies to maintain their operations and continue to provide coverage for customers.
And in terms of regulation, the Federation asked for more coordination between governmental authorities, as well as the allowance of some flexibility to account for existing administrative burdens.
While regulators and supervisors have a necessary interest in the solvency and business continuity plans of insurers, such steps would be important in allowing the industry to concentrate time and resources on serving policyholders and confronting the pandemic, it said.
On this note, the GFIA also requested that governments and regulators relax requirements for paper-based or in-person communication and encourage the digital delivery of insurance documents, given that many firms have had to move their operations to work-from-home environments.
