Forcing insurance companies to cover financial losses brought on by COVID-19 when their policies did not include coverage for pandemics would threaten the stability of the entire global insurance industry, insurers have warned.
The Global Federation of Insurance Associations (GFIA) said in a statement that retroactively changing the terms of policies would also significantly undermine insurers’ ability to pay other types of claims.
“Insurers manage their financial strength in order to meet the promises and guarantees made to customers, whether they are related to the pandemic or not,” the statement says.
“As such, retroactively changing the terms of policies would not be an appropriate way to address the large-scale financial impacts of the COVID-19 pandemic.
“In fact, such actions could threaten the entire financial stability of the insurance industry.”
The GFIA, which represents insurers accounting for around 89% of total premiums worldwide, also said it is vital that insurance can continue to be provided to customers during the COVID-19 pandemic.
As such, it urged governments to make exceptions, or to take other steps, to allow (re)insurance companies to maintain their operations during national lockdowns.
And as regulators demand data on the solvency and business continuity plans of insurers, the GFIA called for some flexibility to account for existing administrative burdens brought on by coronavirus.
Moreover, it recommended that governments and regulators relax requirements for paper-based or in-person communication, and encourage the digital delivery of insurance documents.
“The global insurance industry is an essential stabilising force throughout the world,” the statement says. “Insurers have and always will contribute towards developing solutions to the greatest challenges facing individuals, businesses and governments.
“As the world grapples with the COVID-19 pandemic, insurers remain focused on honouring their promises to customers.”
Image credit | Shutterstock