Reshaping the Insurance Industry Post-COVID-19
Thinking about what the future will look like post-pandemic begs the question could some of the economic pain have been avoided? Could we have predicted the amount of economic loss or which sectors would be most affected by COVID-19 prior to it becoming a pandemic?
To answer those questions, we reached out to Dr. Andrew Coburn, Chief Scientist at the Cambridge Centre for Risk Studies. The Centre for Risk Studies provides frameworks for recognizing, assessing, and managing the impact of systemic threats. The research program is concerned with catastrophes and how their impacts ripple across an increasingly connected world with consequent effects on the international economy, financial markets, firms in the financial sector, and global corporations.
Dr. Coburn notes how the COVID-19 pandemic is the largest ever event loss for the global insurance industry and discusses what that will mean for the industry going forward. Despite the use of pandemic risk models, the main issue for insurers is that claims from the pandemic and government shutdowns have come from almost every category of insurance at the same time.
These type of large ‘clash’ events have changed the industry in the past and as economies return to work there will be a desire to find protection from similar events in the future. It is likely governments will provide a backstop or indemnify insurers against a future ‘clash’ on this scale.
The most significant change may be in the structure and relationship between businesses and the protection products they are seeking from the insurance industry. It may mean the insurance industry creates a closer risk partnership with their policyholders, acting as risk advisors rather than simply writing a check after the event.Authors: Andrew Coburn,