By Vanessa Chance, Partner
As we went into this pandemic, insurers took a hit financially and reputationally. For individuals, the question of whether their travel insurance would cover Covid-19 related cancellations was the main issue; while businesses grappled with whether their Business Interruption (BI) claims would be covered by their policies.
What happened next surprised us all. Hiscox, the High Net Worth insurer with an enviable reputation for claims and service, faced class action over refusing to pay BI claims. It argued that the policy wording meant it was not liable to cover such claims.
Then Admiral, who as one of the largest car insurers are not always associated with good customer service, announced it was going to proactively refund car insurance customers who were doing less mileage during lockdown. There had been some discussions in the media about how car insurance should be cheaper with motorists driving less, but Admiral was the first to take a stand on this proactively make payments to its policyholders. Other insurers then followed suit offering refunds in various forms, but Admiral did well to lead on this.
Travel insurance seemed to disappear overnight. For those looking to book holidays post- lockdown, there wasn’t any cover to be bought. Then, surprisingly, Staysure came out with a product that would cover Covid-19 related claims, although not cancellation claims. Since then Saga and others have followed suit.
As we come out of lockdown, life will be very different. It has been interesting to see how insurers have responded to this crisis and who have come out well. BI insurance is not an easy product to sell at the best of times and it will be even harder after this. While motor insurers are relatively protected by the fact that there is a legal requirement to buy cover, that market is changing as pay-per-mile-based models emerge and may be more popular as remote working increases.
Whenever finances are tight, as they are likely to be for some time, both customers and businesses will look to cut costs where they can and this is likely to affect all insurance sectors. Time will tell how different insurers fare in future and how their stance during this crisis affects their bottom line.