Is COVID-19 Rewriting the Rules for how Insurers Cover Epidemics?

Elliot Shulver
May 20, 2020

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.

Take Action

To read more about the insurance landscape and tax compliance, download Trends: Insurance Premium Tax and follow us on LinkedIn and Twitter 

Sign up for Email Updates

Stay up to date with the latest tax and compliance updates that may impact your business.

Author

Elliot Shulver

Manager, IPT compliance for indirect taxes at Sovos. With 6 years’ experience of indirect tax, including IPT, VAT and Gambling Duties and part qualified chartered accountant, Elliot is responsible for our Consultancy practice, as well as providing regulatory updates for our global compliance solution suite.
Share This Post

LATAM VAT & Fiscal Reporting
May 20, 2020
Sovos Acquires Taxweb, Extends Tax Determination Capabilities in World’s Most Challenging Compliance Landscape

Earlier this month Sovos announced its second acquisition of 2020, completing our solution for Brazil with an unparalleled offering that solves tax compliance in the place where it is most challenging to do so.  Too many companies doing business in Brazil have been burdened by managing multiple point solutions for continuous transaction controls (CTCs), tax […]

Tax Compliance Tax Information Reporting United States
June 1, 2020
The Advantage of a Cloud-First Company

With the acquisition of Eagle Technology Management (ETM) and Booke Seminars, Sovos has united the very best in statutory reporting solutions, technology and expertise. Below is an overview of our strategy following these acquisitions: Sovos’s SaaS and Security Strategy  Sovos at its core is a Software as a Service (SaaS) and cloud-first company. This means […]

ShipCompliant United States
May 28, 2020
Ask Alex: Your Bev Alc Compliance Questions Answered (May 2020)

Do you have questions about the rules, regulations, and compliance requirements of the beverage alcohol industry? This series, Ask Alex, is a perfect opportunity to get those pressing questions answered straight from one of the industry’s regulation and market experts, Alex Koral, Senior Regulation Counsel, Sovos ShipCompliant.  To take advantage of this opportunity and get […]

E-Invoicing Compliance EMEA
May 28, 2020
Turkey’s Transition Conditions for E-ledger

On October 19, 2019, the Turkish Revenue Administration (TRA) published a communique making the e-ledger application mandatory for e-invoice users, companies subject to an independent audit, and companies identified by the Presidency to have poor tax compliance.  The e-ledger application enables businesses to create the legally mandated general journals and ledgers and submit e-ledger summary […]

ShipCompliant United States
May 27, 2020
How Technology Partnerships Improve DtC Compliance

To be an expert, one has a specialty. Ours is beverage alcohol compliance. Since compliance sits at the heart of operations, being connected at every step helps our customers focus on their business instead spending countless hours on manual processes. Compliance is challenging, but we make it easier with a large and robust network of […]

EMEA IPT Tax Compliance
May 26, 2020
Why IPT Reporting is so Complex for Insurers

Accurately calculating insurance premium tax (IPT) for reporting can be complex.  And the ramifications of getting it wrong can be far reaching from impacting profit margins to unwelcome audits, fines and damage to your company’s reputation in the market and with customers. Calculation methods When I speak to customers about how they calculate insurance premium […]