Pressure of COVID-19 claims set to reshape insurer business model

10 Jun 2020

COVID-19 is forcing carriers and brokers to rethink their business models in order to respond more effectively to demands from clients and to the shifting competitive dynamics of the re/insurance market. According to an article in Insurance Day, "The expectation is COVID-19 will have a severe and immediate impact on the scope and scale of claims, policy wordings, top-line growth, insurers’ capital bases and their investment returns."

BLM Partner, Philip Adamis believes that as things stand, insurers will have based their business interruption underwriting and pricing models on the basis of “the many paying for the few” The on­going crisis means “the many are paying for the many” and, as such, there may be issues for some insurers in terms of liquidity margins, given there is likely to be insufficient liquidity to pay for the business interruption claims of the many. “Put simply, insurers will not have collected sufficient premiums to pay for the claims,” Adamis adds.

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Disclaimer: This document does not present a complete or comprehensive statement of the law, nor does it constitute legal advice. It is intended only to highlight issues that may be of interest to customers of BLM. Specialist legal advice should always be sought in any particular case.

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Philip Adamis

Philip Adamis

Partner,
London


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