Most claims in Australia stemming from the COVID-19 pandemic will be long tail claims, according to a new report.
Insurance law firm network Global Insurance Law Connect recently released a new report that revealed the impact of the COVID-19 pandemic on insurers around the world, with law firm Sparke Helmore providing commentary for Australia.
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“Even as 2020 began, few of us imagined that the world was about to face one of the largest pandemics in history, changing the way we live and the economies our businesses operate in,” said Jim Sherwood, chairman of Global Insurance Law Connect. “As events unfold, COVID-19 has also changed the priorities for insurers in the short term. We are seeing similar issues raised around the globe, but always reflecting differing local cultural, political and geographical challenges.”
According to the report, while many of Australia’s insurers have acted immediately to respond to the “financial devastation” caused by the COVID-19 pandemic – including adopting measures such as placing moratoriums on instalment arrangements and deferring premium payments – the impact on “all classes of businesses” will likely have a ripple effect throughout the industry.
“In Australia, we are seeing COVID-19 have a significant impact across multiple lines of cover,” said Catherine Power, national practice group leader for commercial insurance at Sparke Helmore. “The obvious impacts have been seen in the travel, life, health, event cancellation and business interruption classes. But we are also seeing impacts across liability, defence costs, financial lines, and D&O classes. We think the majority of claims will be long tail claims, both in this pandemic phase but also when the recovery begins.”
