COVID-19 Insurance update – September 2021
September 16, 2021 Paul De'Ath
Welcome to the third of our monthly COVID updates – as things continue to open up is it time for everyone to head back to the office, and if so, how are you going to get there?
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Summary
- UK insurance industry reacts to government-backed scheme for events (Insurance Business)
- What will a post-COVID world bring for insurers? (Insurance Business)
- Allianz Holdings reveals drop in GWP in first half of 2021 (Insurance Age)
- Admiral profit soars by 76% in first half of 2021 (Insurance Age)
- Agreement to speed up claims in pandemic expires (Insurance Age)
- Covid-19 drives underwriting losses of £2bn for Lloyd’s market – Insurance DataLab (Insurance Times)
- Zurich believes it has been ‘been at the forefront’ of tackling BI claims backlog (Insurance Times)
- 65% of brokers believe prolonged homeworking has had negative impact – Aviva (Insurance Times)
- U.K. City Centre Offices Drawing Just 18% of Staff, Study Finds (Bloomberg)
- Rail industry urges workers not to spurn the train (BBC)
- Jackson Lee Underwriting includes COVID-19 cover in new policy (Insurance Business)
- Zurich opens energy efficient headquarters adapted to flexible ways of working
Analysis
Removal of special measures could be the next step to the ‘new normal’
Another month has passed, and things are still not back to normal, not the ‘old’ normal or the ‘new’ normal. It feels like things are still very much in a transition phase at the moment as people and companies adjust to the idea of removing restrictions while infections remain high. At the end of the month furlough will end, removing one of the major government interventions in the market that has kept many businesses afloat throughout the pandemic. Hopefully anyone negatively impacted has managed to train as an HGV driver in the last year as I hear they are hiring. The insurance industry is also scaling back the special measures put in place during the pandemic with the agreement to speed up claims now being deemed superfluous. However, in this case it is because the principles put in place are now built into standard claims procedures.
The Oxbow Partners View
Hybrid working is the future, we are told by a number of articles this week and also that many people (myself included) are continuing to work from home the majority of the time at the moment. Despite this, the level of car usage has returned to pre-pandemic levels in recent weeks. The comments from the Rail Delivery Group this week could explain the anomaly – train-based commuting is still only at 33% of the level it was before COVID. It seems that when people are going into the office, many of them are choosing to use their cars rather than get on public transport. This must be a concern for motor insurers. It could be that we see a spike in claims frequency in the latter stages of this year as hybrid working becomes increasingly office based and the number of cars on the roads continues to grow. Something to keep a close eye on in the coming months. Stay safe out there.
Roundup
UK insurance industry reacts to government-backed scheme for events (Insurance Business)
The British Insurance Brokers’ Association (BIBA) has described the £750-plus million Live Events Reinsurance Scheme announced by Chancellor of the Exchequer as, “much needed government intervention.” Under the scheme the UK Government intends to act as a reinsurer to support live events in partnership with Lloyd’s underwriters Arch, Beazley, Dale, Hiscox, and Munich Re among others. The scheme will cover costs incurred in case of cancellations and comes after the government has already implemented the film and TV production restart scheme worth $500 million.
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What will a post-COVID world bring for insurers? (Insurance Business)
With lockdowns easing there is a careful optimism to the thought leadership being seen in reports and webinars. A recent webinar by the Geneva Association including a customer survey of 8,000 people noted that customer expectations have increased in the wake of the pandemic creating a formidable expectation gap for insurers to overcome. Moreover, 40% of retail customers reportedly now consider health and life insurance more important post-pandemic; meanwhile, over 50% of small business owners value business interruption, group life and health, and liability insurance more highly.
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Allianz Holdings reveals drop in GWP in first half of 2021 (Insurance Age)
Allianz Holdings has reported a 6% fall in gross written premium to £1.86bn for the first half of 2021, compared to £1.98bn in H1 last year. This is as a result of the continued impact of COVID-19 and competitive market conditions. Allianz also reported a COR of 91.7& despite Insurance operating profit falling significantly from £72m (2020 H1) to £44m (2021 H1). Understandably commercial business has been impacted with GWP down to £617m from £656m in 2020 H1. Although, Allianz did say it had now paid out on 87% of Business Interruption claims. This news comes in the midst of a restructure which will see Allianz become a distinct personal and commercial lines insurer.
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Admiral profit soars by 76% in first half of 2021 (Insurance Age)
Admiral Group has reported a 76% increase in profit before tax to £482.2m for the first half of 2021, up from £274.4m the previous year. COR also improved to 75.2% from 83% while the insurer’s lockdown rebate cost the company £21.1m. Its UK insurance business contributed £543.5m to the overall group profit figure, while its international insurance division reported a loss of £900,000. Admiral also sold its aggregator business Confused.com for £508m in April.
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Agreement to speed up claims in pandemic expires (Insurance Age)
The ABI and ASCO have agreed to set aside the statement of intent develop to speed up claims resolution in the wake of the pandemic. The measure, which is due to expire on 13th August, designed to resolve disputes more quickly during the pandemic is now considered superfluous. Despite this the ABI reported that many insurers have now embedded the measures as standard practice in their claim’s procedures.
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Covid-19 drives underwriting losses of £2bn for Lloyd’s market – Insurance DataLab (Insurance Times)
The Covid-19 pandemic has driven underwriting losses of more than £2bn in the Lloyd’s market for 2020, according to analysis from benchmarking platform Insurance DataLab.’ Data Labs also announced that financial pressures will continue to affect businesses as the world’s economies emerge from the pandemic. These results have coincided with a drop in GWP across the sector which has fallen by more than a quarter to £530.2m over 2020, compared to £739.1m in 2019. Lloyd’s is likely to suffer from continued pressure while only two lines of business achieved an underwriting profit in 2020.
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Zurich believes it has been ‘been at the forefront’ of tackling BI claims backlog (Insurance Times)
Zurich has claimed that following the Supreme court’s January ruling on COVID-19 Business interruption claims it has been working “very proactively with customers and brokers.” UK chief exec, Tim Bailey, added that the insurer has yet to see the ‘benefits’ of the OIC portal coming through following its launch in May. Bailey also emphasised that “very few” BI claims have been “coming through” this year, meaning that the focus has really been on existing claims. Zurich reported a £35m loss within its property and casualty (P&C) book at the end of H1 due to COVID-19 but reported an overall operating profit of £230m for the first six months.
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65% of brokers believe prolonged homeworking has had negative impact – Aviva (Insurance Times)
According to research by Aviva, more than half of brokers feel that home working has had a negative impact. In particular, 72% of regional brokers felt that prolonged homeworking had a negative impact on wellbeing. 220 brokers were surveyed during July 2021 with 56% reporting that they wanted a balance between home and office. Common concerns included difficulties communicating via remote means (27%) and isolation from colleagues (40%). When asked on home-office balance the majority of brokers desired a 50/50 split between the home and office but local brokers went against this trend with 52% wanting a return to the office most, if not all, of the time.
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U.K. City Centre Offices Drawing Just 18% of Staff, Study Finds (Bloomberg)
Fewer than one-in-five office workers in the U.K. have returned to city centre workplaces since restrictions were relaxed, reflecting both summer holidays and a reluctance to commute. Just 18% of people in the U.K.’s 31 largest cities have returned to their normal workplace, the Center for Cities study has revealed. Figures indicate that London has the lowest turn to the office while Brighton has seen the highest. In a separate report, the Resolution Foundation found that areas reliant on commuters had lagged popular holiday destinations in the labour market recovery.
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Rail industry urges workers not to spurn the train (BBC)
The Rail Delivery Group (RDG) has highlighted that train commuting is still at only 33% of its pre-pandemic level while car usage has returned to normal. With the number of people returning to offices increasing it seems that more and more of us are keen to use our cars rather than the railways. This could see an uplift in motor claims frequency despite the more flexible working arrangements of many staff. The RDG has estimated that a 20% shift from rail to road could lead to 300m extra hours of traffic congestion. The shift away from rail commuting could also impact several businesses that rely on a regular stream of commuters spending £30bn a year on food and drink. SME and Motor insurers will be keen for train travel to get back on track.
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Jackson Lee Underwriting includes COVID-19 cover in new policy (Insurance Business)
Jackson Lee Underwriting has introduced a business travel policy which includes COVID-19 cover. The expenses covered by the policy include cancellation, curtailment, medical expenses, and repatriation. The policies can also be extended to cover destinations where travel is advised against by the Foreign, Commonwealth & Development Office, as long as the advice is to travel only for essential purposes. The policies will be underwritten by Ergo Travel insurance Services on behalf of Great Lakes Insurance.
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Zurich opens energy efficient headquarters adapted to flexible ways of working
Zurich Insurance Group has announced the opening of its new global headquarters, the Quai Zurich Campus. The property has been built to achieve the highest environmental energy efficiency and employee wellbeing certifications. It has been designed to facilitate Zurich’s new hybrid working model, which foresees a healthy balance between remote and on-site work. The aim is for a space that helps employees to work in an agile and collaborative way with less than half of the workspace allocated to traditional desks.
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