What types of claims are costing insurers during lockdown?

ICNZ says that although some risks have decreased, others have risen

What types of claims are costing insurers during lockdown?

Insurance News

By Ksenia Stepanova

Claims volumes for motor and travel-related risks have seen a significant decrease in the past six weeks, but, according to ICNZ, that won’t necessarily mean that costs for insurers will plummet.

A quick transition to a work-from-home environment has meant an uptick in areas where claims could potentially spike, and there will be certain overseas risks that may cost insurers significantly in the future.

For companies moving their operations into home offices, cyber risks have become the biggest security concern, with cyber specialist Delta Insurance warning that the “confusion” of the pandemic is “making it easier for online hackers to cause trouble,” something which could potentially lead to a large increase in cyber claims.

ICNZ chief executive Tim Grafton says that claims on home insurance policies also have the potential to spike, and New Zealand insurers will need to deal with the ramifications of a global crisis, and its effect on importation and supply chain costs.

“We will have to look forward and think about whether we’ll see supply chain issues emerge,” Grafton commented.

“We’re dealing with a global crisis, so vehicle parts may not be available, there may be constraints on the repair sector, and we don’t quite know how exchange rates will play out.”

Grafton says that with people spending most of their time in their home, the risk of household accidents and technology malfunctions will increase.

“There are a lot of unknowns that could clearly increase the cost of claims in the motor sector, and, similarly, there is an increased risk around the home,” he explained.

“Fires occurring, being careless in the kitchen, overloaded electrical circuits or wiring that is incapable of handling the additional load, etc. And from a cyber security perspective, the home environment is one that is often less secure.

“There are certainly a number of risks out there that could materialise because of the changed circumstances that everyone is in at the moment.”

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