Conflict in the air and reputations on the line
Alex Wise takes a look at insurance industry stories that have caught his eye this week.
The response, and sometimes the lack of one, from the insurance industry to COVID-19, is generating a lot of commentary. How the industry is responding and supporting its clients through the pandemic is at the forefront of all our minds. Actions taken now will have a long-term impact on the industry’s future reputation, a word which has appeared a lot in the press this week. Whether or not COVID-19 ends up being the insurance industry's equivalent of the 2008 crash for the banking industry, is pretty much in our hands and there is still a lot to play for.
Preaching over!
Despite the global drive for strong communities and togetherness in the face of the virus, this week also saw more than a few insurance industry stories pointing to the potential for conflict and disconnection. What’s occurring people?
Action and the price of reputation
Adam McNestrie’s commentary in Insurance Insider earlier in the week (Coronavirus will pay a reputational dividend to some firms and impose a tax on others (1)), provided a comprehensive overview of the landscape our global industry faces from the COVID-19 pandemic and how the actions of some will deliver long-term reputation benefits, while those of others may make for a challenging time to come.
Cracks in the ‘shop window’?
The role of claims as the industry’s ‘shop window’ is undisputed! Firms’ reputations can be made or lost depending on the service they deliver when policyholders need it most. But what happens when firms face the pressure to address losses not covered under their policies?
Reuters and numerous publications reported on the Global Federation of Insurance Association’s warning to the world’s governments of the danger of forcing insurers to pay out even when pandemic losses were not included in existing policies(1). What’s at stake? Well just the stability of the global insurance industry, according to the GFIA and many others no doubt.
A great idea, but… we should have talked
Earlier in the week, Insurancenews.com.au reported on comments from one of Australia’s leading broking businesses about a new insurer scheme designed to assist SME customers across the country impacted by COVID-19.(2)
The scheme, announced by Suncorp, QBE and Allianz and approved by Australian Competition and Consumer Commission, included the option to postpone premium payments for six months. What’s not to like?
Well, Mike Emmett the CEO and MD from AUB Group, saw a missed opportunity for collaboration. He described the scheme as well intentioned but suggested that if the parties behind it had consulted brokers before launching it, they would have suggested a solution more aligned to addressing the challenges being faced by SME customers. Perhaps rather than deferring premiums, insurers should spread premium payments. With uncertainty around the resilience of SMEs to survive the impact of COVID-19 or ability to pay the amounts of deferred premiums, that might be a good idea.
This is why, now more than ever, it’s good for brokers, insurers and MGAs to collaborate, share ideas and talk.
When two worlds collide
The PR industry paper, PRWeek reported on a clash between Hiscox and PR agency Media Zoo over the rejection of a business interruption claim (4). The London-based agency said it had taken out specific business interruption coverage related to contagious viruses and had been advised by its broker that it would be covered in the event the pandemic would force its offices to close. When the office had to close following UK government guidelines, the agency turned to its insurer.
While the policy related to “the inability to use the insured premise due to restrictions imposed by a public authority” that was caused by “an occurrence of a human infection or human contagion disease, an outbreak of which must be notified to the local authority”, the claim was rejected on the basis that “cover only applies when there is an incident within a one-mile radius of the insured building”.
One spokesperson from the agency said that Media Zoo had been let down by “an old school insurer” who had “no intention of paying the claim.” Another told PR Week “The insurance industry looks set on doing everything it can to avoid paying out on legitimate COVID 19 claims.”
The devil is in the detail, so we must ensure that all the parties in the insurance contract understand what that detail means.
I want to end on a more positive and optimistic note…
Three cheers for the independents!
Now I am a fan of independent brokers. With consolidation among the major global players continuing, the need for choice and the importance of competition should be music to the ears of independent brokers worldwide. So I was pleased to read about the launch of Partners&, a new UK broking venture from Phil Barton, Stuart Reid and Chris Jelf (5). The new firm’s model is built around partnership with all employees as partners sharing a common goal and focus. To the Partner& team and all those planning to launch businesses in these challenging times I wish you long-term success.
Thanks to Slipcase, Insurance Insider, Insurancenews.com.au, Insurance Age and PRWeek.
(5) https://www.insuranceage.co.uk/broker/7506476/partners-shoots-into-top-100-with-ps65m-gwp