COVID-19 is already impacting the global market. The Organisation for Economic Cooperation and Development (OECD) has predicted that it could be the greatest danger to the global economy since the financial crash.
The COVID-19 pandemic has served as a wake-up call for a myriad of people not only in Malaysia but globally as well. Many have called the pandemic as a “Black Swan” which signifies unpredictable and an extremely rare event that is beyond what is normally expected with severe potential consequences. Apart from the human tragedy which was seen as a huge death toll, the pandemic has wreaked havoc on the global economy which has affected numerous businesses globally.
The impact on the global economy has been catastrophic and devastating. Also, the International Monetary Fund (IMF) has claimed that the global economy will shrink by 3% which is the worst decline since the Great Depression of the 1930s. Many advanced countries such as the UK, US, Canada, Germany and France are expected to enter into a recession phase this year.
Despite the pandemic, businesses are trying their best to sustain their operations. Insurance industry which is known as the backbone for businesses is one of the sectors at the forefront during this challenging period. Insurance companies are investigating how to tackle the situation with effective strategies in order to adapt during this challenging time rather than taking a back seat. Definitely with the right tactics, the insurance companies will be able to secure their financial position and growth during the economic crises and market crashes.
Coronavirus is not an outlier but it is part of the interconnectedness! It is a specimen of the future epidemics that have coincided with globalization and urbanization. As the world becomes more connected, cooperation is required in order to reduce the impact of the epidemic.
COVID-19 outbreak is intrinsically different from the other natural disasters. While catastrophes such as earthquakes, hurricanes and floods hit specific regions but this pandemic has no geographical bounds. The timescale of the pandemic is virtually unpredictable and highly contagious. This makes it difficult for the insurers to assess the frequency and severity of the losses in order to model the risks.
Nevertheless, the insurance sector has finite resources and if a disaster hits everywhere simultaneously, it will definitely put too much strain on the insurers side. On the global perspective, the uptake of the pandemic insurance has been quite low as consumers perceive that the premiums of the coverage are pricey and due to the reason of risk distancing. Also, businesses currently opt for insurance policies that exclude the coronavirus pandemic coverage which has caused insurers to not be able to build up enough reserves to pay up the claims.
As we are aware, many businesses are trying their best to protect their operations against the pandemic. Organizations are also agile in adopting technologies which can help them to continue their operations while complying to the social distancing rules. Hence, the experience that the insurance companies have gained from adapting to the COVID-19 lockdown will play a significant role in moulding the pandemic insurance policies.
What we can see in the future is that insurance brokers will be able to assist businesses in adopting the right measures in times of the pandemic and be able to reduce their financial risks. They will help to support the recovery and the future resilience of the customers despite the future waves of COVID-19 and other unanticipated epidemics.
In order to ensure insurance companies are able to face challenges successfully, insurers should consider establishing cross-functional and effective decision making to coordinate the organization’s response when setting out new procedures. A proper comprehensive communication system should be in place to ensure employees, distributors and clients are fully informed about the business status.
One of the significant concerns for the insurance industry is protecting the health and safety of their employees and distribution partners in order to maintain business continuity. Insurers are also being challenged to review their crisis management plans consistently and to carry out their operations with minimum disruptions. Insurance companies function as shock absorbers for the economy and society. Also, the insurance industry should be well-prepared for large loss events such as COVID-19 and be well-capitalized for any onrush claims.
In spite of tackling this pandemic, many insurers have lended a helping hand to those in need throughout the pandemic period. Let’s see how the top insurers in Malaysia have dealt with it.
Tune Protect Group has announced the pledging of RM1 million to the Tune Protect Cares for COVID-19 Aid. As part of their Corporate Social Responsibility (CSR), this fund will be made available to the Tune Protect Malaysia (TPM)’s individual policyholders, registered agents and employees. Tune Protect Group will be indemnifying RM5,000 to the affected individuals due to the untimely demise of the individuals or their family members caused by the disease. The main motive of this is to provide financial relief to their customers, staff and agents as well as their family members during this challenging period.
On the other hand, Manulife has also conducted a Special Financial Assistance Programme to customers diagnosed with COVID-19 by providing Hospitalisation Income Support and Compassionate Benefit. Under Hospitalisation Income Support, a daily RM200 will be payable for each day of hospitalisation upon the diagnosis of COVID-19 and kept quarantined at any of the Ministry of Health Malaysia (MOH) designated hospitals. It is subjected to a maximum of 30 days payout per life. Whereas, under the category of Compassionate Benefit, a lump sum of RM10,000 will be paid upon death due to COVID-19.
Moreover, AIA Malaysia has provided financial support to all the doctors, nurses and hospital staff working in Ministry of Health (MOH) designated hospitals in screening and admitting COVID-19 patients in Malaysia. This initiative symbolizes their appreciation of the sacrifices and contributions made by the medical community as being the frontliners during the pandemic. The financial support provided by them are Inconvenience Allowance and Compassionate Relief. Under the category of Inconvenience Allowance, if a doctor, nurse or hospital staff is diagnosed with COVID-19 when performing their duties, they will be given a one-time inconvenience allowance of RM1,000. While under Compassionate Relief, if there is any demise of doctor, nurse or hospital staff due to COVID-19, an additional lump sum of RM10,00 will be paid to the victim’s beneficiary.
In brief, it can be summarised that the impact of COVID-19 has shaped the insurance industry to a level which has made them to be more resilient and adaptive to face challenges in the future.
By working together, we can definitely slow down the global circulation of the virus!
Life is fragile and not a rehearsal! Why not do something for yourself that you know you will not regret tomorrow?
Insure yourself against COVID-19 now.
To know more about COVID-19 insurance, visit www.policystreet.com and check out the exclusive and guaranteed deals we have! Feel free to drop us an email (firstname.lastname@example.org) or give us a call (+603-3310 0063) if you need further clarifications – we are always ready to help.