A new report by Insurance Europe considers a number of industry takeaways from COVID-19 as opportunities for re/insurers to evolve and strengthen against future challenges.
For example, COVID-19 has demonstrated the importance of clear contractual wording and, more broadly, confirmed that the information provision to consumers is both key and an area with room for improvement.
IE also note how the pandemic has confirmed the importance of a fit-for-purpose prudential framework to ensure optimal outcomes for consumers.
Also, the report touches on how COVID-19 has raised important questions concerning the resilience of economies, financial systems and societies in general, and how these can be enhanced moving forward.
IE believes there is an opportunity to explore the role insurance could play in this regard, for instance through public-private solutions that calculate the level of risk that can be viably underwritten by the private market.
In this regard, IE contributed to an issues paper outlining shared resilience solutions for pandemic risk, published by the European Insurance and Occupational Pensions Authority (EIOPA).
Additionally, in light of the increased online activity during COVID-19, IE says the insurance industry is keen to contribute to increasing society’s cyber resilience, for instance by developing tailor-made cyber insurance products.
COVID-19 might also generate awareness of the need for people to take responsibility for their own retirement income and for countries to speed up efforts to reform pensions. IE sees this as particularly crucial as global population levels continue to increase.
Against this backdrop, private pension solutions offered by insurers are reportedly more likely to play a bigger role in ensuring the adequacy of future retirement provision.
Finally, given the constrained balance sheets of banks, there is potential for insurers to play a significant role in supporting post-COVID-19 global economic recovery.
In order to enable this, it will be essential to review any existing and impending regulatory obstacles to investment in the real economy by insurers and consider any enabling measures that could be taken in the design of prudential regulation or approach to supervision.