An insurance firm, goes the old gag, is an organisation which gives you an umbrella, and then takes it away when it starts to rain. That has never been clearer than with coronavirus, with insurers trying to wriggle out of all kinds of claims for business, interruption, cancelled holidays and so on. Needless to say, it turns out that many policies either have exclusion clauses for a pandemic – or at least clauses which can be interpreted in that way. In the US, state legislators have threatened to force insurers to pay out for coronavirus-related insurance claims if they try to withhold claims – insurers, in return, are bleating that such claims could put them out of business.
Sure, the losses will be massive, but isn’t the whole point of insurance that it transfers the risk from a few to be spread on the shoulders of the many? Someone’s got to pay for the massive disruption to business, and surely, where individuals and businesses are properly insured the burden ought to be falling on insurers and re-insurers – who are supposed to constitute a gigantic web to make the spread of risk as broad as possible. If the insurance industry can’t cope with an event like Covid-19 then what is it for?
I learned the hard way about the usefulness of insurance policies when I tried to make a claim for my laptop screen which was broken on a trip to Germany. I tried to claim on my Ryanair travel insurance policy – which only cost £10 and I soon found out why. It turned out that not only did it exclude any damage to electronic goods – and just about anything else which could possibly break – but I was supposed to provide a full report of exactly where it got broken. Without that – and it simply isn’t possible to follow airport baggage-handlers around – then I couldn’t claim. I have never bought a travel insurance policy since, and have restricted myself only to buying policies such as car insurance which I am obliged to buy.
One thing that the insurance industry isn’t telling us, needless to say, is that in some ways it is going to benefit substantially from coronavirus. Road traffic in Britain was reported last week to have fallen back to 1955 levels. If motorists can’t drive, they can’t crash, either. I have just had the renewal premium for my car insurance, which doesn’t seem to be granting me a reduction for the fact my car has sat on the driveway without moving an inch for the past three weeks and very likely won’t for a month or so yet.
Think, too, of all those annual travel insurance policies which are supposed to cover all travel within a period of 12 months. If you can’t get to Borneo, you can’t come to grief there. I haven’t found any figures on this, yet, but I imagine that domestic burglaries are going to plummet this year. When everyone is locked down, the opportunities of finding homes unattended are severely curtailed. Remarkably, life insurers have had a good time this year, too – at least so far. Up until 20 March, the latest date for which the Office of National Statistics has published mortality figures, overall deaths in the UK are actually down compared with the five year average. We seem to be catching other diseases less than normal, while accidental deaths are surely going to fall, too, with no-one hang-gliding and the like.
So it is all swings and roundabouts for the insurance industry – except that while insurers are happy to accept the savings they have made on the swings, they are less enthusiastic about paying out on the roundabouts.