DD GIRNAR Prasaran September Month Time table For std 9 to 12 Home Learning Online Education
The Covid-19 coronavirus outbreak that began in China towards the end of last year has now become a global pandemic. Although it now appears to be slowing in China, the spread of the disease is accelerating elsewhere, with the World Health Organization recently describing Europe as its current `epicentre'. Governments are reacting in ever more dramatic ways, closing borders, imposing lockdowns and travel restrictions, shutting schools and colleges, and banning mass gatherings such as sporting events.
The way the crisis will run from here cannot be known. But alongside the tragic human toll, it is already having considerable economic impacts, posing major challenges to the global supply chain and certain business sectors such as airlines, travel and leisure, and causing significant stock market volatility and some precipitous falls. Central banks including the US Federal Reserve and the European Central Bank (ECB) have responded by cutting interest rates. The ECB has expanded its quantitative easing program to make more liquidity available and the Fed could follow suit after the US joined many other countries in declaring a `national emergency'.
A crisis such as Covid-19 affects all business sectors - but it especially puts a spotlight on insurers who can expect to be inundated with general inquiries and claims across multiple different lines, whether that be for health, life or non-life cover. Balancing the need for responding to this influx of activity in the contact centres with a quickly shifting remote workforce is an area that insurers are working to address. Of course, countries are at different stages of coronavirus activity.
Starting with non-life or general insurance first, I expect the impact on claims to be relatively manageable. Most insurers learned the lessons from the SARS outbreak of 2003 and introduced exclusion clauses for communicable diseases and epidemics/pandemics into most non-life products such as business interruption and travel insurance.
Business interruption policies usually pay out only if physical damage occurs to an organization's assets or operations - so coronavirus related claims may not be covered, but there is potential for future disputes on this issue. Travel insurance, meanwhile, may offer cover if a customer is diagnosed with the virus before or during their trip - but not for travel that is cancelled because of the pandemic, unless a customer has taken out premium `any cause' cover, which very few have. Of course, interest in `premium' policies could change in a world after COVID-19.
Event cancellations may cause greater losses to insurers as some large events (but certainly not all) have policies that may cover them even for epidemics or pandemics. The largest event taking place this year is the Tokyo Olympics where analysts estimate approximately $2bn of coverage.
It is likely that the reinsurance sector will bear some of the brunt here, as insurers claim back the costs of cover from them over a certain threshold. One major global reinsurer, for example, has been quoted as having exposure of over 500 million euros should all events covered for pandemics be cancelled.
Clearly, this year could prove to be a difficult one for many insurers given the predictions of the economists, some of which are saying that a “U” shaped or even a “W” shaped recovery pattern may be more likely now (as opposed to “V” shaped). Early questions are starting to emerge around possible recessions around the world. Why? We've seen such varying virus containment efforts which dramatically impact consumption levels on a local level and therefore impact speed to recovery. Expectations vary on the long-term impacts; no one can be entirely sure.
While it is tempting for insurers to suspend investment and cut costs in such a challenging financial year, I believe the crisis creates an incentive for them to do the reverse - continue to invest in how they operate and create a more agile, digitally-enabled business. In other words, now more than ever insurers should keep investing forefront in their minds so that they can be prepared for the future.
By this I mean firstly embracing the flexible and remote working that will be needed across all sectors due to the virus, insurance included. The crisis provides the opportunity for insurers to test and ensure that their businesses have sufficient connectivity to support more staff working off-site and in flexible ways - now, and for the future too.
What this means today is that management teams should be rapidly assessing operational areas with high concentrations of human capital support such as call centers, claims, shared service centers, etc. to determine the impact. Business disruption or resiliency plans are being tested, stressed and in some cases derived. This is especially true in areas where there is a lack of digital workflow tools, limited virtual or mobile work station capabilities or unscaled communication technology. These traditional methods are often used for completing moderate to more complex processing activities that require a team approach to resolution. This situation is allowing for a significant shift in the adoption rate of new ways of working, including the supporting technology, which may change the ways organizations are run post crisis.
Speaking of technology, the crisis could also be the spur to look at moving more systems and applications to the cloud - an area that insurers have lagged other sectors in. With more people working remotely, having systems in the cloud offers much greater bandwidth and capacity than if staff are accessing on-premise servers remotely. This is an opportunity for the insurance industry and could be the catalyst for this movement. Actuarial modelling software, for example, often sits on individuals' computers, as there are deemed to be security issues with putting it in the cloud. But with today's cloud services offering enhanced security protocols, perhaps the time has come for more of the industry to make the move.
More broadly, insurance businesses - as other sectors - need to embark on the digital transformation of their organizations, to become more agile, responsive and connected enterprises. Perhaps one legacy of the coronavirus crisis could be that it actually propels more insurers to do that.
These are extremely challenging times for individuals, families, businesses and indeed whole societies and economies. The insurance industry has a key role to play in supporting customers and societies through the crisis and recovery.