Like many other businesses, life insurers are having to adapt to a new normal as the coronavirus pandemic continues to cause global lockdowns.
Fortunately, policyholders are covered for Covid-19, despite it being a new virus, as Simon Jacobs, head of underwriting and claims at Aegon, confirms: “Coronavirus is not excluded from any of our protection policies. We’ll treat customers who sadly die or become critically ill as a result of coronavirus in line with our existing claims philosophy.”
Royal London takes a similar approach, as Craig Paterson, underwriting and claims philosophy manager, reports.
He says: “Royal London policies cover claims for pandemics such as Covid-19 and death or critical illness claims related to the virus will be paid in full in line with the terms and conditions of the policy.”
- Insurers are currently covering claims for coronavirus
- The full impact of coronavirus on protection claims is not yet known
- The crisis could change customer perception of risks and industry
And claims are being paid.
LV reports that it has already paid out more than £2.5m on coronavirus-related, income protection and death claims.
So, is this the start of a heavier influx of life insurance and income protection claims for the insurance industry?
“The industry is expecting a wave of claims and will be paying out more than would have been expected in normal times,” says Peter Hamilton, head of retail protection at Zurich.
“We are currently processing more than 200 death claims, and sadly we expect many more.”
However, the whole picture may not be revealed for some time, according to Mr Jacobs.
He adds: “The full impact of coronavirus on protection claims may not be known for many months and until we can compare 2020 with previous years.”
Mr Paterson agrees, adding: “We’ve already received a substantial number of claims linked to Covid-19, but it’s too early to tell what the impact will be on the volume and amount of claims we and the rest of the industry pays.”
Mr Jacobs also observes that the volume of claims might be counteracted by other factors.
He says: “It will be interesting to see whether the expected increase in coronavirus-related claims might be, to some extent, balanced out by the impact lockdown might have on death rates.
“With fewer people travelling and fewer people in the workplace, we would expect to see a reduction in life insurance claims — for example, due to road traffic accidents.”
There are some grey areas to consider too. As Mr Jacobs explains, it would be difficult to attribute any increase in claims specifically to coronavirus.
He says: “In fact, it may not always be easy to identify whether coronavirus may have been a factor, as many deaths will occur in those who also have serious underlying medical conditions.
“The accuracy of our claims data will depend on the cause of death stated on death certificates.”
So the industry is bracing itself for a wave of coronavirus claims.
But according to Ian Sawyer, commercial director at life and health insurance intermediary, Assured Futures, the volume might not be as high as initially estimated.