The World Health Organization declared the 2019–20 coronavirus outbreak a Public Health Emergency of International Concern (PHEIC) on 30 January 2020 and a pandemic on 11 March 2020.
How the reinsurance industry responds and behaves towards its customers now has the potential to secure or damage its reputation for a generation to come.
1. With politicians and commentators upping the rhetoric against insurers relying on exclusion clauses, is there a danger that insurers could become portrayed as the “new banks”?
«In France, insurers haven’t yet been targeted by politicians and commentators even if some SME’s representatives have already called upon State aid or an extension of business interruption covers. In fact, commentators are rather active fuelling controversies about the government’s response to the sanitary crisis! Besides, exclusion clauses applying to business interruption claims are not an issue for the population.
However we shouldn’t take this situation for granted. Public opinion’s focus may turn to SME’s difficulties when we will be struggling through the economic crisis. Therefore it is in our interest to respond right now – clearly and also with empathy – to policyholders’ concerns if we do not want to be portrayed as “bad guys”!"
2. If this is a concern, what can the industry do to influence opinion formers and demonstrate that the industry is a responsible member of the global economy? Is the industry doing enough to lobby and speak with one voice?
«Clearly, in the current circumstances, we shouldn’t pull in different directions and look for the spotlights. That’s not what people expect and doing so would expose us to a backlash.
Conversely, French insurers have taken public and tangible commitments to demonstrate how they join in national solidarity effort and show flexibility toward SMEs and individuals that are impacted by the Covid-19 measures: € 200 million contribution to the Government Solidarity funds and benign treatment of late payments (either insurance premiums or rentals) for the whole containment period."
3. Is there a danger that some courts or law makers may look to undermine exclusion clauses? What could happen if this were to occur?
«I do not think there could be such a risk in France. Until now, the Finance Minister, Bruno Lemaire, made clear that he shares the insurers’ point of view on exclusion clauses, and no law suit has been filed here against insurers in relation to Covid-19 measures. But the pressure could increase in the upcoming months as the economic crisis will develop. That’s the reason why, while reaffirming current business interruption clauses do not apply in the current circumstances, we commit to consider the creation of a dedicated indemnification scheme for future sanitary crisis, if any.
4. What impact is the Covid-19 crisis having on upcoming insurance and reinsurance renewals and how is your business responding to ensure continuity for clients?
«CCR Re suffered no major disturbance for the upcoming April 1st renewals which is good news given the tariff increases we register in Asia. Likewise, we manage to run the business and to deliver the service on a business as usual mode thanks to the desktop virtualisation and the video-conference solutions we upgraded no later than November last year. This virtual infrastructure allows to operate all internal processes that have been fully dematerialized for the last twenty years by the company. And the time we do not waste in planes and airports, we spend it to chat with our clients via Webex or Zoom. So we “keep in touch”!
5. What are brokers and carriers doing to adapt coverage and provide extensions and other solutions to insureds as they manage temporary shutdowns and other Covid-19 related changes to their business operations?
«Generally speaking, it’s critical to contribute to the real economy resilience throughout the crisis. To this end, all stakeholders – banks, insurers, asset managers, analysts, public authorities, etc. – must behave responsibly and avoid exacerbating the crisis by inappropriate actions. More precisely, one should prevent corporate bankruptcies and to safeguard consumer and investor confidence in the financial sector.
For their part, insurers have a critical role to play as they are both structurally cash rich and genuinely shock absorbers. This is the reason why we, in France, have committed to maintain insurance covers for SMEs and professionals and to accept late payment of rents. In particular, the French government has decided to reactivate the State credit-reinsurance scheme operated by CCR from 2008 to 2011 to encourage credit insurers to maintain their insurance covers to the benefit of all SMEs. We should also continue to invest in corporate loans and bonds and resist the temptation to flight to quality.