Have insurers turned a crisis into an opportunity?
Georgina Fenton – Political Risk & Credit
Key participants in the credit and political risk market have been telling us that they are not seeing the anticipated tsunami of claims as a result of Covid-19. In 90% of cases, insurers are granting waivers, consenting to restructurings, deferring payments and working closely with insureds to find responsive and flexible solutions to problems.
The main large claims emerging recently appear to result from fraud rather than Covid-19. The pandemic has simply accelerated claims which would have been made anyway, rather than itself producing a deluge of large bad debts.
At the recent GTR conferences, panellists suggested that collaboration between insurers and insureds might lead to fewer claims than before Covid-19.
As a market-leading broker said, credit insurance is a discretionary purchase for many organisations, and they have other options to spread their risk. Therefore credit insurance has to perform, and to be seen to do so, at this critical time.
And it looks like it is; insurers may be using the global uncertainty to forge closer relationships with insureds, working through complex restructuring proposals with the common goal of, where possible, preserving trading relationships for long term gain and avoiding winding up positions at a cost both to insureds and insurers.
Of course, the worldwide stimulus is playing a big part in averting financial crisis. Only time will tell the full impact, and many insurers expect this to be as late as Q2 2021. For the time being though, we are not seeing a repeat of the GFC.
To conclude, it seems clear that insurers have responded constructively to insureds’ needs and prevented the market from being overrun by a tsunami of claims; a response which will help to forge even closer working relationships in the future.
Has this been your experience?
From ASL’s side, although we are not seeing a deluge of claims, we are seeing a steady stream.