The Global Federation of Insurance Associations (GFIA) has issued a statement warning of the need for the continued financial stability of the insurance industry and the danger posed by forced coronavirus payouts. The statement detailed the work being done by the global insurance industry to help develop solutions to the greatest challenges facing individuals, businesses and governments, and its role as an essential stabilising force throughout the world.
The statement highlighted that: “GFIA understands that governments around the world and international organizations are also fulfilling their necessary duties to respond to the crisis: both in protecting the health of their citizens and in supporting the businesses that drive their economies. GFIA appreciates that central banks, governments and international organizations have put forward proposals targeting flexibility in respect to some regulatory and data collection requirements.”
The GFIA asks that, as governments around the world implement emergency response measures, they consider the following factors:
- Without the continued financial stability of the insurance industry, the GFIA said, insurers will not be able to respond to the crisis or honor their obligations to customers. The GFIA highlighted that in policies where coverage for pandemics and other causes of loss were not included then requiring insurers to cover those losses retroactively could seriously threaten the stability of the global insurance industry. Events that are covered by insurance such as fires and natural catastrophes do not stop during a pandemic, the GFIA highlighted, and insurers need to be able to maintain the financial strength to meet the guarantees made to customers. Retroactively changing the terms of policies could threaten the entire financial stability of the insurance industry and significantly undermine insurers’ ability to pay other types of claims, the statement highlighted, which could exacerbate the negative impacts the economy is currently experiencing.
- The GFIA noted that while insurers fully support any necessary restriction of the movement of people or the scale down of business operations to slow the spread of COVID-19 , as with other major catastrophe events, such as flooding or earthquakes, it is essential that insurers can respond to their customers during the pandemic. The GFIA urged that governments act on requests from national markets for exceptions or other steps to allow (re)insurance companies to maintain their operations.
- Some regulators and supervisors have implemented additional data calls and requests for information from insurers, the GFIA stated, and while these decisions are the within the remit of supervisory authorities the Association believes that coordination between governmental authorities and the allowance of some flexibility to account for current administrative burden will be essential in allowing the insurance industry to concentrate time and resources on serving their customers and handling the pandemic.
- Finally, the GFIA noted that, as insurers have moved their operations to work-from-home environments to continue to be able to serve their customers, this transition presents several administrative challenges particularly in areas where regulatory requirements insist on documents being delivered by mail or in-person. Governments and regulators should, therefore, relax these requirements during this period and encourage the digital delivery of insurance documents to allow the emphasis to be on customer outcomes instead of the means of document delivery.