How the COVID-19 Affects the Insurance Industry?
The World Health Organization (WHO) was informed of an outbreak of “pneumonia of unknown cause” detected in Wuhan City, Hubei Province, China – the seventh-largest city in China with 11 million residents on December 31, 2019. As of January 23, there are over 800 cases of 2019-nCoV confirmed globally, including cases in at least 20 regions in China and nine countries/territories. Later on, Chinese authorities reported that laboratory tests excluded SARS-CoV, MERS-CoV, influenza, avian influenza, adenovirus, and other common respiratory pathogens.
Coronaviruses are known to be a large family of viruses, some of which cause less serious diseases like the common cold and others more serious diseases like MERS and SARS. However, some of them are easily transmitted from person to person, while others do not transmit.
Corona Virus in Our Lives
Covid-19, commonly known as coronavirus, is a serious global infectious disease outbreak with more than 400,000 cases and over 25,000 deaths worldwide up to 28 March. You can check the numbers whenever you want from the Covid-visualizer. The coronavirus has a huge impact on almost every aspect of our daily life. Everything from our social habits to our working order has recently changed with this virus. These changes not only happened in our personal life but also affected all sectors. The insurance sector is also one of the sectors affected by the virus.
Coronavirus Effects on Insurers
The Coronavirus Disease (COVID-19) outbreak will likely influence life insurers in the following ways: Increment incurred claim costs, including death and disability claims, and drug prices. Adverse actions in the financial markets, covering declines in bond yields, equity markets, and real estate, decreasing profitability. Business deduction and potential influence on profitability. As coronavirus continues to extend across to the whole world, its effects are rippling across financial markets and the global economy. The life insurance industry is no exclusion, particularly given the incrementally global nature of many insurers and their biggish investment portfolios. Although most countries have had minimal reported coronavirus cases so far, and as a result, the efficacy on claim costs for life insurers is remissible to now, the effect on business operations for some global insurers has already emerged, particularly for those operating in high-risk regions such as US, China, Iran, and Italy. Most life insurers await to feel the effect of coronavirus on the financial markets because of the highly interlinked global economy. Officials said the coronavirus has changed customers' behavior, and insurance companies should take this into account. According to Christopher Woolard who is the interim chief executive of the FCA,(Financial Conduct Authority) insurance firms should realize this and treat their customers fairly, realizing the conditions customers may find themselves in. Epidemics are eliminated from many business insurance policies, therefore the early prognosis was for low levels of claims. But as stagnation intimidations, the global economy along with incrementing insolvencies, all sorts of companies with trade credit insurance are coming under strain. Meanwhile, insurers’ investments are also coming under strain.
How Pandemic Effects on Car Insurance
Obviously the coronavirus will deeply affect the health insurance and also car insurance industry especially car purchases and loans affected by this pandemic. The ability to pay car insurance will also be affected by the coronavirus. Therefore some insurance companies are extending the time for their customers who have difficulty paying due to the coronavirus pandemic. According to WHO, almost 1.24 million people die in car crashes worldwide and according to Safer America, the yearly cost of traffic accidents in the United States is estimated to be $871 billion. These rates and numbers are expected to drop due to the virus, even if precise data has not yet been shared. Because, with the virus, driving rates decreased. This caused the accident rates to drop.
Above are the weekly death rates in the USA. Here, we see that death rates have decreased because of the reduction of leaving home due to corona. This decrease is expected to be seen in the rate of traffic accidents for the same reason.
Do the Turkish Life Insurers have COVID-19 covered?
There is a great article that posted by KPMG here Do insurers have COVID-19 covered?
In Turkish market as well as worldwide through, many insurance companies have taken the necessary measures against the coronavirus and have taken essential steps. Mapfre Sigorta, Bupa Acıbadem Sigorta, Groupama Sigorta, Eureko Sigorta, and Allianz are the insurance companies that announce a good news for Covid-19 patients. Their life insurance cover all of their corona treatment costs without exclusion.