Insurance class to see a period of “growth and stability”, but appetite for pandemic cover remains muted
There is now more clarity for both businesses and insurers around what can be expected from a business interruption policy, following the pandemic and despite the backdrop of high inflation, increased scrutiny on wordings and higher premia,
This is according to research from Global Insurance Law Connect (GILC) across 19 different countries.
Gillian Davidson, GILC’s chair and a partner at Sparke Helmore, said there was still muted demand from insurers to provide pandemic coverage, despite appetite from buyers.
“There will still be a need by some clients for pandemic cover (particularly if the recent resurgence of cases in Asia leads to renewed Covid measures and focus on such protection) and it remains to be seen what appetite insurers will have for such cover and at what cost.”
The global pandemic thrust business interruption insurance into the spotlight. Many businesses found the cover did not respond how they had anticipated, and there have been numerous disputed claims around the world, in addition to some high-profile test cases.
“Even though businesses globally were facing similar challenges the response from the insurance industry, governments and regulators varied markedly in each jurisdiction,” said Davidson.
“However, a consistent picture is that globally demand for business interruption has increased as businesses have become focused on the need to have the right type of cover.
New variant in China
The outlook for BI insurance as a class is more positive than it has been in years, according to the report.
This is despite some short-term pressures on pricing caused by global inflation, a recent wave of cases in Asia (including a potential new variant in China) and ongoing legal challenges hanging over from the pandemic.
“The pandemic has focused the market on the need for clarity in policy drafting and has led to a proliferation of covid-responsive policies that either clearly exclude or include pandemic cover providing more certainty for insurers globally, and their clients,” concluded Davidson.
“Consequently, business interruption insurance as a class could see a period of growth and stability at last (particularly in more traditional areas of coverage such as property damage).