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Virus spikes ‘outweigh reduction in claims’ from lockdowns

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Claims reductions due to COVID19 lockdowns have been “outweighed” by virus-caused spikes in other areas, a report from Allianz Global Corporate & Specialty (AGCS) says.

AGCS says “sharp falls” in economic activity and social distancing measures led to “material reductions” in claims for some property and casualty lines, most notably in the aviation sector, but also more generally as a result of fewer accidents at work, on the roads and in public spaces.

“Overall, there has been a slight reduction in traditional property and casualty claims in the mid-corporate sector compared with what would have been expected, with a more marked reduction in cargo and aviation claims,” the report says.

“The cost of non-COVID-19 related business interruption claims has also fallen as many manufacturers and their supply chains went into hibernation, and are only gradually coming back on line.”

However, claims surged in other lines of business and “considerable uncertainty” remains. Positive trends in overall claims for insurers have been outweighed by COVID-19.

“We have received thousands of COVID-19 related claims from the entertainment sector [where AGCS is a major provider of insurance to the film, TV and events industry] and the mid-corporate market, and these are only partially offset by a reduction in aviation and property casualty claims,” Global Head of Short Term Claims Ray Hogendoorn said.

“Although many commercial property casualty claims notifications will not be covered losses due to the terms of the agreed coverage, they still have to be handled.”

The report also says insurance coverage during future pandemics or a resurgence of COVID-19 should be “much clearer”.

It says that during the current pandemic, insurers have clarified wordings and informed policyholders of exclusions or the extent of cover.

“Over time, there may be a shift in policy wordings away from pandemic clauses,” Mr Hogendoorn said.

“Coverage will be much clearer in terms of what is included and excluded for infectious disease outbreaks. Dealing with claims in the next pandemic will hopefully be much more straightforward.”