COVID-19 having a dramatic impact on insurers after an 'angry summer': ICA

The Insurance Council of Australia (ICA) has welcomed general insurance being considered as an "essential service" during the COVID-19 crisis, but noted that it's far from business as usual for insurers who are experiencing a significant impact on their operations due to the social distancing and shutdown rules.

ICA Head of Communications Campbell Fuller said: “Insurance is not listed as a restricted activity or business. This means insurers can continue to work hard to provide services and support to Australians. They’re committed to helping their customers through the pandemic," said Campbell Fuller, ICA Head of Communications. “However, this is not business as usual. Far from it. COVID-19 is having a dramatic impact on the operations of most businesses due to social distancing and shutdown rules."

Fuller noted that insurance companies and brokers are already dealing with an extraordinary burden from more than 252,000 claims worth $4.6 billion following the 'angry summer' of natural disasters. The country experienced at least sixth catastrophe in the past six months - bushfires in New South Wales (NSW) and Queensland in September 2019, October's Rappville NSW bushfires, November to February bushfires that affected Queensland, NSW, Victoria and South Australia. The ICA also declared catastrophes for hailstorms in November and in January that struck eastern Melbourne, the Australian Capital Territory and parts of NSW, and the storms and flooding along the east coast in February.

The representative body of the general insurance (GI) industry in Australia is seeking clarity from the federal, state and territory governments on essential services arrangements. It is also seeking guidance from essential service authorities in each state and territory whether insurance-related workers are able to cross state borders without having to enter isolation.

Additionally, the insurance council member companies are seeking to help small businesses (SME) and household customers on an individual basis, especially those experiencing hardship.

“We expect most insurance business operations and urgent services will remain available during shutdowns, even if restrictions on the community are toughened. It is inevitable that many customers will experience delays and interruptions," ICA said.

"If the current shutdown is made more severe, insurers expect emergency repairs would continue to make a building safe for householders. Motor vehicle claims and repairs, and other assistance, should be maintained for vulnerable Australians and for those involved in delivering critical services during the pandemic."

ICA noted that there might be delays due to the ongoing outbreak, but the insurers are working on continuing claims, assessment and repair services. Claims settlements, and the sales and renewals of most products along with most back-office functions are ongoing.

Meanwhile, many travel insurers have suspended sales of international travel products due to the Federal Government’s travel ban, while some are providing products for travel in the second half of the year.

Some insurers have temporarily placed an embargo on the sale of landlord insurance policies, or are adjusting what can be covered in future policies. This is due to the uncertainty created by the fast-moving and rapidly changing COVID-19 situation, and discussions by governments about rental protection measures and their potential impact on landlords, tenants and insurers.

ICA noted that industry-wide measures are being examined but unlike the banking sector, which has generous government fiscal support, general insurance is a diverse industry that offers complex short-term contracts. Insurers do not have equity (via mortgages and loans) in customer assets to protect their financial exposure.