Coronavirus has already immeasurably changed how we live, work, travel and socialise, and the insurance industry is certainly no exception.
Looking back, policies agreed at the beginning of this year could never have reasonably taken into account the scale of this pandemic because nothing like this situation has graced the world in living memory.
Furthermore, it’s unlikely that even the most cautious of pandemic clauses would have foreseen the sheer volume of delays, cancellations and restrictions imposed on society and the global economy.
For sectors such as hospitality, events and travel, businesses will be seeking airtight policies to cover themselves for any future outbreaks, however for insurers, lengthy discussions around future policies are needed and what can change to protect customers while still balancing risk and reality.
Many travel insurers have already blanket removed coronavirus from new policies and renewals, for example, and the spotlight will continue to shine on epidemic clauses as a whole.
How does the future look for insurers?
Hundreds of thousands of policies are being disputed and it looks likely that this will continue for the foreseeable future.
Even after lockdowns have been gradually lifted and a semblance of normality returns, insurers will have to assess next steps for risk assessment as well as handling an increase in customer queries and consultations. As well as the additional workload of increased claims, many on a complex case-by-case basis, insurers are also closely monitoring changes to tax payments during this time.
Some jurisdictions have postponed tax payments and filing dates. For instance, in Italy the filing requirement of the annual insurance premium tax (IPT) return has been deferred by a month to June 30, and in Portugal the filing of returns for March and April has been pushed back by 5 days each month. However, these concessions appear to be a one-off and provide temporary respite rather than more long term relief for taxpayers.
There is also some leniency on penalties for late submissions, however again these appear to be assessed on a case by case basis and shouldn’t be viewed as guaranteed. This situation could also continue to evolve, so it’s important to stay on top of and closely monitor any developments.
It’s equally important to remember that this isn’t tax relief, just a delay-to-pay, and insurers should ensure that when lockdown measures are lifted, filing is in order and processed promptly. More than ever, now is not the time to invite an unwelcome audit involving redirection of precious resource which could ultimately result in costly fines.
Business as normal might be on hold for many but unfortunately, taxes are not. Governments globally will need to collect what is owed to help finance measures put in place aimed at easing the financial strain on businesses during COVID-19 and this is especially true for more indirect taxes such as IPT.
IPT rates could well increase in the future as a result of current events, so we will be following and sharing the latest developments to ensure our customers are aware of the latest regulatory changes and what resources are available to help insurers navigate the new landscape that will emerge from this global event.