The coronavirus pandemic’s full effect on insurance is yet to be revealed, however one thing is for certain, the shockwaves will be felt for years to come. Looking at the numbers, Lloyds of London have recently forecast that COVID-19 will cost the insurance industry £167bn globally this year resulting from claims related to the pandemic as companies close, and holidays and events are cancelled.
Amidst everything, it’s easy to forget that insurers are facing a host of other challenges. Some are a direct consequence of the world being put on hold, such as the delay to Portugal’s new digitised stamp duty reporting system, whilst others have been creating waves in the insurance world for some time.
The rise of Insurtech and on-demand insurance
Insurtech is rewriting the rules of insurance, from how customers interact with their insurer to the types of cover on offer. Agile technology startups are using machine learning, automation and data science to underpin innovative products like short-term coverage and pay-per-mile car insurance.
More established cross-border insurers are trying to keep pace with these new players whilst dealing with the challenge of integrating new products with existing systems and not only paying insurance premium tax (IPT) accurately but also calculating it correctly at the first instance.
Whilst on-demand insurance has many benefits for consumers, it can cause administrative headaches. All these policies still need processing, auditing and taxing – but remember, the taxes are periodical rather than real-time and can cause compliance issues if overlooked.
Brexit isn’t going anywhere
It may have fallen off the radar in recent times as negotiations to determine the future relationship between the EU and UK beyond the end of the transition period have taken a COVID-19 initiated pause, but Brexit is still very much an ongoing challenge.
Although the European industry has been planning since the UK’s vote in 2016, global insurers and those residing in the UK are still awaiting greater clarity on what will happen after the transition period.
One of the main concerns surrounds whether or not EU based agents will still be able to act for EU insurers in the UK once the transition period ends. Currently there are no plans to extend the transition period, but recent events could of course change this.
Emerging insurance trends
Categories such as cyber insurance are another new challenge.
Quantifying the risk of non-physical threats is not as straightforward as for contents or building insurance and with new, more sophisticated threats emerging all the time, insurers are having to keep abreast of the latest developments to ensure policies represent the current threat landscape.
IP insurance also continues to gain prevalence as more and more creators fight to retain ownership of their original content. IP theft and infringement comes at a significant cost and organisations are seeking insurance to cover the legal costs of pursuing IP cases.