Sat. May 18th, 2024
How The Insurance Industry Has Been Affected By COVID-19

2020 has been significantly challenging and different year than usual. This year, we have seen business being forced to close for many months, countries across the world going into lockdown, countless lives being lost, and more. This is all due to the COVID-19 virus, which has had a devastating effect on the globe. Thankfully, in the UK, the number of cases has significantly dropped, meaning that many more businesses can return to usual activity, however, many remain closed. This is primarily due to the services or products provided not being able to comply with social distancing, which is vital during this pandemic.

How The Insurance Industry Has Been Affected By COVID-19

Due to the virus, many businesses have unfortunately had to shut down as a whole due to not making any profit during the closures. As many businesses are losing income, jobs are also being lost so the businesses can remain open. When things go wrong in personal life or business, the first point of call is usually the aid of insurance. During these unprecedented times, it may leave you wondering, how has the insurance industry actually been affected? This blog explores how COVID-19 has affected the insurance industry.

What Industries Are Seeking The Aid of Insurance?

Many types of insurance have increased in demand since the COVID-19 pandemic, significantly for small business insurance and retail insurance. This is likely due to small business owners being aware that the future of their business may seriously be affected due to the pandemic. Data from Google Trends has suggested that in April (early-lockdown), searches had rapidly increased for small business insurance. In stable small businesses, owners may also seek the aid of small business insurance for instances after reopening, such as people ignoring social distancing guidelines and an outbreak being linked to their place of work.

The risk of an outbreak starting in a store may also be the reason why the demand for retail insurance has increased. A store would need to be covered if an outbreak was sourced back to their store. The COVID-19 pandemic has been seriously damaging for many financially, therefore, it is a possibility that stores may be more vulnerable to shoplifting. Shopping after lockdown has proved to be significantly different, with face masks being mandatory in all stores, which clearly proves there is increased risk. Retail businesses understanding the new risks is a likely reason for them seeking the aid of insurance.

What Has Caused Insurance Companies to be at a Loss?

Many insurance policies cover some of the devastating or inevitable effects that the COVID-19 pandemic has had on the world. Due to the devastating effects being widespread, it has put many insurance firms at a major loss. Below are different lines of business that have caused insurance firms to be at a loss.

  • Event Cancellation – Many events in 2020 have been cancelled due to mass gatherings being unsafe. Event cancellations are usually insured and the funds required when it occurs are substantially high.
  • Business Interruption – This covers losses in unexpected circumstances where usual business is interrupted, and almost all businesses have been at a loss due to COVID-19.
  • Travel – COVID-19 has prevented many from being able to safely travel, and cancellations are usually covered with insurance.

The above has likely caused the biggest loss for insurance companies across the globe, however, other lines of business such as trade credit insurance, cyber liability, and directors and officers liability has caused major disruption for insurance businesses.

About the author

Ellis David are High Net Worth Insurance Brokers based in London. They provide their clients with expert advice on all things insurance whilst utilising their relationships with over 100 insurers to get the most competitive policies for clients.

We are interested to hear your thoughts, let us know how you, a family member or the company you work for has been affected

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