Rising unemployment, the closure of many workplaces and a move to working from home in all but essential services has muddied the waters for insurers and will put the spotlight on claims criteria as restrictions begin to be unwound.

That’s the prediction of leading actuaries Rice Warner, which says governments around the world will grapple to find a way to ease social distancing measures.

But senior consultant Michael Berg says Australia and New Zealand are in “pole position” to beat the odds and successfully transition toward a post-COVID-19 era.

This will be significant for insurers, where the major area for claims exposure stemming from coronavirus is likely to be disability cover such as total and permanent disability and income protection.

“The big one for insurers is revisiting their criteria for disability claims with reference to whether somebody should be viewed as actively at work when cover commences,” Mr Berg says in an interview with insuranceNEWS.com.au.

“The big challenge in claims is on the disability insurance side. Nearly every time there’s an economic downturn anywhere there is upward pressure on these claims.”

Income protection and total and permanent disability, are going to be in focus, as these are often a grey area where it can be difficult to judge whether someone is partially disabled and it is “inherently difficult where to draw the line whether disability is permanent or temporary”.

When employment opportunities are good policyholders often find a way to “push through”, but when employment opportunities fall away and they have an eligible condition, they will seek to claim on their insurance, Mr Berg explains.

For life insurers, the number of deaths from COVID-19 won’t affect a large percentage of the population, being concentrated on older Australians.

“The financial impact on insurers is not going to be large,” Mr Berg says. Governments should be planning a carefully considered and phased exit that is evidence-based, using testing as a circuit breaker.

See ANALYSIS.