The coronavirus pandemic is likely to affect the insurance industry and various insurance operating models as we know it today. From business interruption and supply chain disruption to event and travel cancellations, we are only just seeing the beginning stages of the impact resulting from the pandemic.
We’ve sat down with Scott Newland, General Manager - Government and Long-Tail Claims, to gain a deeper understanding of the unprecedented challenges brought by COVID-19; offer a perspective on the forecast for commercial, speciality, and personal lines, and outline priorities for organisations and government departments to consider as they navigate the crisis.
How will the pandemic impact motor-related claims?
Given the recent closure of non-essential activities and increased work from home activities, there will be a reduction in the number of motor-related claims.
Further to this with border closures and people encouraged to stay within their local communities, it is expected to keep vehicles off highways decreasing the volume of severe or high impact claims, or those related to driver fatigue. As we continue to have the COVID-19 restrictions in place, we will continue to see a reduction in motor claims frequency from businesses and individuals.
It’s vital for organisations and government bodies to take advantage of the lower motor vehicle usage in their fleets and have any minor repairs for driveable vehicles carried out or initiate activities that can assist to bring the claim to finalisation given the increased capacity of body shops.
What do we expect to happen to property and business claims?
It is likely that there will be a shift in the types of property claims that come through. There will be a potential increase to business Interruption and event cancellation claims, particularly under government statements of cover, as a direct result of the cancellation of trade, arts and sporting events. However, due to the decreased underlying volumes and given the economic impacts to customers, businesses will look to reduce costs by consolidating assets and inventory into fewer buildings, decreasing the overall frequency of claims across the portfolio.
Organisations and government bodies should look act now on the lower asset or site usage and have any minor repairs or maintenance carried out. Whilst the building and construction industry faces significant challenges on most common remedial works, there has been limited supply chain impacts on materials and supplies, over the short term this is not expected to change.
For those organisations that sites have been closed for an extended period of time. Site surveys and walk through's will need to be conducted before re-opening to ensure that the building or site is safe and any repairs or alterations can be made prior to re-opening to meet any new requirement to mitigate against any liability exposure.
What are the risks associated with COVID-19 and liability claims? What can organisations and government bodies do to mitigate these risks?
There is potential for a decline in claims during the lockdown restrictions period given reduced foot-traffic, economic down-turn and closure of sites and services, however we are anticipating a sharp increase in slips, falls and other liability claims as people return to retailers and other public places post COVID-19 restrictions.
Additionally, the pandemic brings an increased risk of allegations that organisations and government bodies have failed to put sufficient risk management strategies in place to protect against infection (for example, personal protection equipment, sanitizers, physical barriers, and proper physical-distancing measures).
Government bodies and organisations priorities during this period is two-fold. First, they need to look at alternate dispute resolution to bring existing claims to closure with these tips:
- Consider the forum most appropriate for resolving your specific dispute in a cost and time-efficient manner;
- Be open to using mediation in a virtual world - virtual mediations are being praised for being as effective as in-person meetings.
- Consider arbitration as it provides the parties with the flexibility to adopt a procedure suited to the specific dispute, including the use of virtual hearings; and
- Consider proposing procedural solutions that will assist courts in conducting matters online or through virtual hearings.
With the anticipated increase in disputes in the current environment, we will also see a welcome increase in the use of technology to resolve disputes in an efficient and timely manner.
Secondly, it may seem straightforward but prepare your organisation or firm for reopening, ensure all staff safety training is up-to date and relevant you may want to consider the following:
- Complete a risk assessment of your business or site and where possible utilise readily available technology for virtual site assessments and ensure that they are documented.
- Review and document any physical or procedural changes following your risk assessment to decrease/mitigate against incidents occurring. (leverage any COVID-19 learnings, e.g. controlled traffic flow, physical barriers, improved cleaning and hygiene practices)
- Any maintenance or repairs that can be conducted whilst there is reduced foot traffic, should be acted upon to minimise any work or hazards that may exist before this foot traffic increases.
- Just-in-time training for staff before re-opening ensuring safety and security protocols are top of mind to prevent incidents occurring.
How is the health liability portfolio impacted by the change in consumer preferences?
Health Liability or Medical negligence is a very intriguing portfolio where the claim type is likely to shift, with the closure of elective surgery there is likely going to be a downturn in the frequency of claims originating from these procedures.
Conversely, new risks which have been introduced to the health care system will likely drive an increase in new claims as a result of new practices additionally with our Health workers being on the front-line and most at risk in exposure to COVID-19.
What are the priorities for businesses surrounding their accident and health portfolios?
There are a number of high-risk portfolios under the accident & health which will carry the burden of the impacts of COVID-19. With amateur and professional sports paused, planes grounded and borders closed, people working from home, there will be several wide-reaching impacts:
- An initial tsunami of claims for cancellation of trips as a result of the travel bans
- Longer-term impacts the longer international borders stay closed is that we will see a significant decline in claims.
- Personal accident claims are likely to fall sharply as a result of several sporting associations and volunteer organisations having to withdraw activities.
The priorities for any business are to understand your exposure, work closely with your claims partners to stream-line claims activities to expedite the claims process to best support claimants and to anticipate obstacles relating to claims and document a plan to mitigate them.
How can you get in touch with a GB claims professional?
Scott has over 15 years of experience and knowledge in the insurance industry. As General Manager – Government and Long Tail Claims, Scott focuses on leading the development and growth of two critical lines of business, which showcase the depth of expertise within Gallagher Bassett in providing claims management solutions to Government bodies and liability and professional indemnity solutions to clients.
To learn about GB’s General Insurance claims management services and get in touch with a claims professional, please visit https://www.gallagherbassett.com.au/general-insurance-claims/