While most insurers and brokers agree that the industry won’t see the full extent of the impact of the COVID-19 pandemic until late this year, Meena Wahi (pictured), director at Cyber Data-Risk Managers in Melbourne, says premiums and exclusions will almost certainly change.
The pandemic has created a deep global recession many say will take years to come back from. Wahi says it may also place greater pressure on a business’s ability to purchase insurance in the first place.
“Risk and uncertainty have increased – it shall impact all industries including insurance,” Wahi said. “The full impact shall become clearer later this year, but I feel we will see an increase in premiums to some extent and also more exclusions, including those related to pandemics in policies.”
Wahi, who enjoys the “scope” of insurance work, says the pandemic has provided a fresh opportunity for insurers and brokers to develop a nuanced and critical understanding of what she calls “black swan events” and how they impact policies.
“As a broker I would like to see inclusions for pandemics related business interruption for clients in the health industry and for those in event management,” she explained. “It is a threat as some businesses may not survive and the impact on solvency and director’s liability comes into question.”
But great challenges often open doors to opportunities for new players, which Wahi says is already being witnessed overseas by the take-up of more flexible policies.
“This trend of flexible policies would benefit businesses if it continues,” she said. “There are examples of underwriters offering policies on the basis of pay as you go – so you may just buy a component of a policy for a specific period only.”
As the industry slowly emerges from state-enforced lockdown laws, Mahi says her priority remains supporting her clients, but business sustainability is also an issue.
“I like advising clients on emergent risk and helping them identify gaps in their insurance policies for risks that may not be obvious,” she said. “Also, helping my clients reduce their insurance costs – which is always a happy outcome.
“But I think there is a challenge of sustainability in all regards – will businesses survive? Will they still trust insurance to offset their risk? Will we see more risks emerge that challenge traditional policy wordings?”
Wahi says while she will continue to educate her clients on the importance of being adequately covered during uncertain and unprecedented times, some of her hard work has already paid off.
“I recently helped a client reduce their premiums by 30% and streamline all their policies with more specific coverage – it was very rewarding,” she revealed.
“Sometimes getting cover, for example for a drone security provider, can be hard, hence approaching international underwriters with the risk appetite and finding the right policies.”
In the coming months, Wahi says she would like to design more innovative policies with the help of underwriters, which she hopes will support Australian start-ups.
“I would like Australian start-ups to have the right kind of cover for their patents, designs and trademarks in the next 12 months,” she said. “Start-ups are very cost averse, but for me it is important that I, in offering insurance, enable innovation and growth to demonstrate a value add for the policies we offer.”