In recent months, insurers have been hearing from clients who have expressed disappointment that their cover did not provide more protection from the economic impact of COVID-19. It is clear that the profession needs to learn lessons from this crisis and do more to make sure clients understand what is covered by a policy at the point of sale in order to close the gap between expectations of cover and the reality of what can be provided. As CEO of the Chartered Insurance Institute, I feel that, as well as evaluating what lessons need to be learned, it is also important to reflect on those examples of good practice that have taken place during these challenging times.
The latest data from the government shows that insurance services, which functions as a financial safety net for people during a time of need, has never been more important. As the COVID-19 pandemic continues, the insurance profession has worked hard to make sure that this safety net is able to stay in place during these trying times. In fact, the Office for National Statistics recently reported a surge in unemployment as a result of COVID-19, whereby the number of paid employees in the UK fell by 649,000 between March and June.
During these times the CII has maintained a consistent dialogue with our members to ensure that we stay abreast of the new challenges faced by the insurance profession as they arise. In June, more than 60% of insurance professionals reported to the CII that they have been in contact with clients who are now struggling to afford their insurance premiums as their finances have been drastically impacted by the economic fallout following COVID-19. I expect that in the days and months to come the number of insurance professionals contacted by clients struggling to afford premiums will increase. As Chancellor Rishi Sunak recently pointed out, it is only when the government’s furlough scheme ends in October that the true figure of unemployment in the UK will be known. It is therefore vital that insurance professionals continue the great work they are already doing to help clients, who are facing a financial crisis, to maintain consistent cover.
Insurance professionals have shared with us how they are helping their clients reduce the amount they pay in premiums where, due to the impact of coronavirus, there has been a material reduction in risk, but where cover is still needed, for example the recently widely reported reduction in the cost of motor insurance or the extensions added to some travel policies. This accentuates the importance of considering an insurance policy on a case-by-case basis, taking into account each client’s individual needs so that their cover can be as effective as possible for their particular circumstances. In maintaining this working practice, insurance professionals can review the various policies available to ensure the level of cover is relevant for their clients, thus allowing them surety during this period of ongoing difficulty.
It is during difficult times such as these where the role of the insurance profession is felt most profoundly by the public. It is often said that, for clients, the moment of truth as to whether the insurance profession can be trusted comes at the point of making a claim. Ahead of this, to ensure continued trust in our profession, it remains vital that we continue to do everything we can to maintain affordable, easily understood, and appropriate cover for clients during these challenging times.
In the meantime, we await the revelations from the FCA who have recently been undertaking work, through the court system, relating to business interruption insurance for the SME market. These findings are expected to be made public in August.