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Dec 2021

Emerging from the pandemic

Source: Asia Insurance Review | Nov 2021

Most of us have been scouring the newspaper headlines for signs that the worst of the pandemic was behind us and that we could once again look to the future with something approaching confidence.
 
And the signs are now starting to emerge. Governments are suggesting that we need to get used to the idea of living with COVID-19 and that, with proper vaccination, it need no longer be a death sentence.
 
One inspirational sign for the reinsurance sector must surely have been the Baden-Baden Reinsurance Meeting 2021 that was held as an ‘in person’ event rather than simply online – with almost 1,500 participants.
 
That must have come as something of a relief after the still-virtual Rendez-Vous de Septembre this year.
 
The insurance landscape in Asia Pacific has changed dramatically because of the pandemic and it looks like this is where the hard work really begins.
 
One shocker was the emergence of new mortality statistics – life tables that show a sharp decline in life expectancy in many markets – including those that previously would have been considered mature and developed markets.
 
What does this mean for actuaries and the pricing of life policies? Is it simply a case of plugging in the new numbers and wishing upon a star? I suspect not. But one thing is sure that life companies cannot afford to get it wrong.
 
And then there are horror stories from the expert medical community that tell us that during the time that we were all social distancing, wearing masks and frantically washing our hands, very few people caught influenza or a cold – or suffered from the many other respiratory maladies that we generally endure.
 
This has left us, collectively, with weaker defences than we should have against such things and that the year-end could see a huge spike in all manner of airborne diseases – including, it seems, tuberculosis. This will not be good news for life or health insurers – and probably not great news for all other insurers – or, for that matter, their customers.
 
And what of the millions of people who had the misfortune to catch COVID-19 but fortunate enough to survive? How many will have long-COVID symptoms – and have our health insurance policies kept pace? What is the cost of offering cover for long-COVID and do we really know how to define the symptoms?
 
Are we confident that we have developed an approach to business interruption (BI) insurance that will withstand the pressures of the next pandemic? There still seem to be significant differences between how the courts in many markets are handling BI – with the UK, USA and Australia all treading quite different paths – not to mention home markets of Asia Pacific.
The upside is that the pandemic has rapidly accelerated digitalisation.
 
According to a Swiss Re Institute survey undertaken across South and Southeast Asia focused on attitudes towards buying personal lines insurance online, the market could reach a cumulative $7.5bn in premiums over the next five years. As Swiss Re rightly says, this highlights a unique opportunity for insurers.
 
One rather stark finding from the survey was that 40% of consumers would prefer to buy personal lines insurance online, with India topping the list of markets ready to embrace digitalisation. Who would want to be an agent now?
 
It looks like the brave new world is here already.
 
 
Paul McNamara
Editorial director
Asia Insurance Review
 
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