The self-employed and SMEs should be at the forefront of the debate
By content director Saxon East
Just when you thought the reputation of the insurance industry could not get any lower, along comes coronavirus sparking a deluge of business interruption claim requests with no chance of payment.
Insurers arguments against pandemic payments are sound - it’s hard to risk model, extremely complex and too costly. It’s really a matter for governments.
Yet these explanations have not washed with the public, with one MP vowing to bring the ‘unacceptable’ insurance industry behaviour to Downing Street.
What the insurance industry can start doing is looking for solutions. Although not common, some insurers do already offer narrow forms of insurance in certain sectors for pandemics.
Today it is reported that Aon’s head of innovation Karl Cripps believes a parametric solution would work well.
Turning to a state and insurance partnership scheme, it may be that businesses over a certain turnover fall outside the Pandemic Re scheme, and will just have to self-insure.
For SMEs and the self-employed, which make up the vast majority of businesses, insurers could offer cover to a certain limit with the government then taking over.
There would also be time ceilings on length of coverage that the business interruption covers, such as a maximum of three months.
The problem is that even if such solutions were possible, it can take years of discussions with the government, moving like an oil tanker to its final resolution.
Brokerbility chairman Ashwin Mistry is also right in that the scheme could prove very costly for SMEs, and even with state backing, business premiums could still rise considerably.
Yet for the sake of the reputation of the insurance industry, the ABI and its members need to be pushing hard for a debate.
The debate must widespread, with plenty of time given to media briefings. This is very important, and today’s reports show that people are actively thinking about pandemic cover.
There is a big public relations crisis potentially brewing for insurers, and indeed brokers, but this debate will show insurance has its beleaguered customers at the forefront of their thinking.
A voluble debate must take place. Thought leadership is needed now more than ever. So who will be brave enough to step forward? At Insurance Times, we will be listening.
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