COVID-19 Insights

As the COVID-19 response continues to evolve we review the potential impact on General Insurance. See a summary of the impact on individual classes of business, and other key insights and data dashboards to help you respond to business challenges as they arise.



  • Significant reduction in premium volumes due to travel restrictions and ongoing public and business reluctance to travel.
  • A number of companies suspended sales of new travel insurance policies towards end of March.
  • On March 26, IAG announced refunds of any unused portion of travel insurance premiums with no administration and cancellation fees; Allianz, Suncorp and QBE made a similar announcement on 3 April after the ACCC granted an interim authorisation for insurers to work together to implement COVID-19 relief measures.


  • Ability to claim generally depends on the date the policy was sold, the date travel was / is due to commence, and policy terms and conditions.
  • Policies sold before a certain date have cover, but possibly not for all losses (such as choosing not to travel before government restrictions were in place, or losses subject to general exclusions).
  • Policies sold after a certain date have no COVID-19 cover. Dates range from 20 January to 12 March, based on when the insurer considered COVID-19 was widely known.
  • Insurers will need to consider whether their interpretations are correct, or ‘fair’; ambiguous wording may cause higher claims at a later date.

Workers Compensation


  • Reduction in premium for many industries due to workforce shutdowns.
  • Direct COVID-19 claims will vary considerably by industry depending on the work being undertaken, and so industry specific rate increases may be required in some areas.


  • Increase in claims due to workers who test positive to COVID-19 where employment meets the necessary legal links to the disease (i.e. it usually requires that employment was a significant contributing factor, or similar); particular exposures are: health care, emergency services, pharmacies, aged care and also contract cleaning, education, retail and other essential businesses.
  • Reduction in claims due to less work being done, particularly for industries that are affected by containment strategies (such as hospitality and aviation).
  • Potential increase in psychological injury claims, whether from increased work demands, changed work procedures, social isolation and in some cases PTSD.
  • Increased claim duration and delayed return to work due to impact of containment measures on RTW opportunities and business insolvencies.
  • If the COVID-19 situation becomes prolonged, the transition from workers compensation benefits to other forms of social support (including the new JobKeeper payment) will need to be considered once medical recovery has been made.
  • Difficulties accessing elective surgery and specialist medical advice, that in some cases will delay recovery.
  • Difficulties in implementing effective rehabilitation strategies during social distancing restrictions.
  • Impact of working from home, and a heightened societal focus on safety, on mental health, safety and stress of employees.
  • Longer term lower economic activity is likely to impact both claim frequency and claim duration.

Business Insurance


  • Reduction in volumes, particularly in the SME segment where businesses may not survive the shutdown or choose to reduce the level of insurance purchased or even cancel cover to preserve cash flow. This may leave some businesses exposed to fire and natural perils risk.
  • Where premiums are a function of turnover, expect to see drops due to lower business revenues. This may come through lower adjustment premiums.
  • Sectors with more pronounced COVID-19 related impacts include travel, retail, entertainment and hospitality. Business supporting essential services, such as supermarkets, agriculture, plumbers and builders appear to have been resilient so far.
  • On 26 March, as part of a support package for SME customers, IAG announced deferred premium payments for up to six months for those experiencing financial hardships; refunds on the unused proportion of premiums for those who cancel their insurance, with no administration or cancellation fees. Allianz, Suncorp and QBE made a similar announcement on 3 April after the ACCC granted an interim authorisation for insurers to work together to implement COVID-19 relief measures.

Claims – Property (including business interruption)

  • Limited direct impacts as majority of policies are likely to contain exclusions relating to losses caused by diseases notifiable under the Quarantine Act or the Biosecurity Act. Overseas there has been some pressure for insurers to pay business interruption claims despite pandemic exclusions; in the US in particular some State legislators have threatened to pass Bills to force insurance payments for COVID-19 related closures.
    • Property policies mainly cover losses from physical damage to the insured property from a covered peril. In the absence of physical damage from a covered peril, contingent business interruption / lost income would generally not be covered.
    • Property policies can include coverage for disease within a certain radius of the property. These covers are often subject to sub-limits and are more common for certain sectors such as retail and hospitality. Governmental/similar authority action (shutting down/ limiting access to the insured premises) is usually a pre-condition for coverage so a voluntary shut down, as a precautionary measure, taken by the business owner is unlikely to trigger the cover.
  • Indirect impacts relate to changes in claims costs arising from changed business conditions because of COVID-19.
    • Disruptions in supply chains may lead to both delays and inflation in claims costs. China is a major manufacturer of building supplies and we might see inflation in claims cost as a result.
    • As a result of business operating at reduced capacity we would expect less machinery breakdown and fire claims.

Claims - Liability

  • Liability claims arising from a perceived breach of duty of care in relation to visitors, contractors or those under care, especially in the hospitals, age care facilities, disability, schools, restaurants, airlines, cruise lines, supermarket sectors.
  • Potential for new type of class actions alleging negligent response. In the US a couple has filed a lawsuit against Princess Cruise lines.  In Australia, the handling of the Ruby Princess has led to speculation around class actions against both the government and the cruise line.
  • Some policies could see favourable claims impacts with less ‘slip & trip’ style claims due to reduced face to face interaction between businesses and their customers.
  • Claims settlement activity is likely to be impacted, particularly with many courts and mediation conferences now being suspended and greater difficulty in obtaining ‘expert’ opinions. However some plaintiffs and their lawyers looking for cash flow may seek an earlier settlement and settle for lower amounts.



  • Car sales are being impacted significantly (20% reduction in new car sales in March). This will lead to fewer new business opportunities in the coming months.
  • Renewals and cancellations are likely to be impacted by consumers seeking better ‘value for money’ particularly as many insureds are using their vehicle less. Customers may also look to cancel, reduce their cover to Third Party, or look at PAYD options.
  • Reduction in demand for taxi and ride share services will reduce premium in these small but not immaterial segments.
  • Commercial motor portfolios would also see reductions in volumes and/or increases in policy cancellations, especially for hire cars.


  • Public health containment measures mean less traffic on the roads with many people working from home (although there will be some offset to this by substitution of private vehicles for public transport) and fewer discretionary trips in the evenings and weekends. As a result of this reduced usage there will be fewer collision claims overall.
  • There may be increased delays in reporting claims as insureds are reluctant to have vehicles repaired if they are drivable.
  • Claim size pressure is upwards with supply chain and exchange rate impacts increasing the cost of parts as well as additional work on sanitisation of vehicles. Delays in repairs due to the unavailability of parts will lead to increased use of hire/courtesy cars, further increasing total claim costs.
  • Recoveries are likely to reduce due to limited salvage opportunities, a higher proportion of uninsured drivers and a more challenging operational environment.



  • Reduction in number of house sales in the short (to medium) term will impact new business opportunities.
  • Increased price sensitivity may lead to more shopping, reduction in level of cover or cancellation of insurance.
  • In late March we saw many insurers temporarily cease to offer ‘rent default protection’ cover in landlord’s insurance policies due to the uncertainty around potential government intervention into residential tenancy agreements. (We understand that landlord’s insurance make up approximately 10% of Home GWP nationally).


  • In the short term, more people at home (isolation/ Work from Home measures) could lead to improvements in theft and other claims (burst pipes etc) that are less likely to occur, or be less severe if policyholders are at home.  These make up a relatively small proportion of total claims cost so impact would be minimal.
  • Constrained capacity on supply chain combined with large scale natural disaster pose a material risk to insurers in terms of being able to service claims, likely leading to increases in claim sizes.
  • Although there is some reprieve on most regulatory timelines, with the new GICOP taking effect on 1 July this year insurers will need to ensure their operations (particularly claims) are managed and delivered to the levels and timelines outlined within GICOP – a challenge that has been heightened by COVID-19.
  • The government’s response to residential tenancy agreements and potential protections for tenants could have a material impact on ‘rent default’ claims for landlord’s insurers. The impact of these remains to be seen. 



  • CTP is compulsory for all registered vehicles; however, we might expect to see a decline in registrations due to people not using their vehicle and financial stress. Note that claims arising from unregistered vehicles are covered by the Nominal Defendant and these arrangements are different in each state.
  • New vehicle sales have reduced, so there is likely to be minimum organic growth.
  • Cancellation of taxi plates will lead to refunds of CTP premium for this class – any point to point premiums which have a usage based component will have a reduction in premiums collected.


  • The containment measures mean less traffic on the roads with many people working from home (although there will be some offset to this by substitution of private vehicles for public transport) and fewer discretionary trips in the evenings and weekends. As a result of this reduced usage there will be fewer collisions and fewer CTP claims overall.
  • However, there could be an increase in more speculative claims due to depressed economic conditions.
  • Claim size impacts will depend on the benefit regime. Where statutory benefits are available we might expect lower medical costs but poorer recovery outcomes and lower RTW.
  • The incidence of mental health claims (secondary psych or psych overlay) is likely to increase, which could impact recovery and increase claim durations and cost.
  • Common law benefits are less likely to be impacted but claims settlement activity could be impacted, particularly with many courts and mediation conferences now being suspended and greater difficulty in obtaining ‘expert’ medical opinions. However some plaintiffs and their lawyers looking for cashflow may seek an earlier settlement.
  • Those claimants entitled to common law damages for economic loss could argue that their injuries are likely to even further disadvantage them in the open labour market.
  • Although CTP scheme regulators are mandating flexibility in claims management including allowing telehealth and the use of allied health practitioners for certification, it will be interesting to observe what impact such changes have upon claims including whether it leads to some claims leakage.

Professional Indemnity (including Med Mal) / D&O / E&O


  • Professional indemnity premiums for some professions will be impacted by lower levels of activity during containment measures. For example, the ban on elective surgery will impact the level of activity by private doctors and hospitals. A lower level of business and investment activity might reduce revenue for lawyers and other consultants.
  • A material economic downturn will impact volumes, particularly in the SME segment.


  • Direct impact from increased Medical Indemnity claims (particularly for hospital exposures, health care and disability sectors) due to the general pressure on the healthcare system and potential for direct Covid-19 claims (including secondary claims from dependents) due to hospital acquired cases.
  • Indirect impacts may arise
    • Increased E&O claims where a key team member is unable to perform their role.
    • Potential FI D&O claims from large Financial Institutions exposed to economic recession risk. Economic stimulus from government may help to offset solvency risk and general market wide falls alleviates (but does not remove) risk for advisors and fund managers.
    • Increased D&O claims where a firm fails to have adequate contingency plans in place, as well as potential impact on financial statements amidst a regime of continuous disclosure.
    • Increased cyber claims as a result of less security in the working from home environment.
  • An economic downturn would result in a significant increase in claims from D&O and professional indemnity as a result of business and investment scheme failures; some sectors (e.g. professional services) will be more vulnerable. During the Global Financial Crisis the industry PIDO claims costs were 40% higher for 3 years.

Consumer Credit Insurance


  • Premium levels have generally been trending down in recent years due to regulatory impacts and withdrawals from the market.
  • Demand could increase if consumers’ perceived risk is increased given the current financial uncertainty (for those insurers that continue to offer these products).


  • Significant increase to unemployment related claims are already occurring, and likely to continue. Duration of the economic shock will be a factor, although it is likely that policy terms that cap the duration for which benefits are paid will kick in.
  • Insurers will need to consider how Government wage supports (such as JobKeeper) and standing down of employees rather than termination affects claims.

Trade Credit Insurance


  • Premium volumes could reduce, particularly from businesses unable to trade due to lockdown and social distancing measures.
  • Insurers may look to avoid or limit coverage to perceived high-risk businesses as an underwriting measure. Recently an insurer announced a reduction in coverage for business with limits less than $US250,000 and limiting cover above this amount.
  • In Europe, governments are stepping in to guarantee payments so insurers can continue to provide coverage. Germany and France are amongst a few countries putting in place such measures.
  • Credit rating agencies have put out negative outlooks on trade credit insurers in anticipation of COVID-19 impacts.


  • Significant increase in claims due to economic downturn.
  • Enforced shutdown measures likely to push companies into financial difficulties and add to the spike in insolvencies expected from the supply chain disruption.
  • Impact will be more severe from certain sectors, inter-alia Aviation and Retail.

COVID-19 Susceptibility Index

Where are the most vulnerable populations in Australia?

Using our Defin’d model of the Australian population, the Finity analytics team have developed the COVID-19 Susceptibility Index.

Click here to learn more.


Webinar series

By | COVID-19, Uncategorized

As the impact of COVID-19 evolves we review the potential impact on General Insurance. Upcoming webinars for Finity clients will  be focusing on: Commercial Lines impacts Personal Lines & Analytics…

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Ask us a question

If you have a query regarding these insights, let us know.

What else does this mean for insurers?

Finity has established a dedicated team of consultants who are focused on investigating the implications of COVID-19 on General Insurance. From the impact on individual classes of business to industry-wide pressures, we will be updating this page to bring you summaries of the key outcomes that will affect you.

Contact us to discuss these insights further

Estelle Pearson

Estelle Pearson

Ph  +61 2 8252 3331
Mobile  +61 419 420 079