Covid-19 Idea Pulse Alerts: Week 9
INSURER ACTIONS IN AUGUST 2020
Since May, the Idea Pulse series on COVID-19 has been monitoring innovations and insurer strategies that are being shaped in response to the pandemic. In our concluding article, we cover insurer actions between August 21 and September 4, 2020, and also highlight product innovations for the “next normal”.
New COVID-19 Products
Colonial Life, a US-based group health insurer, has launched a new group critical illness plan with an optional rider that offers a lump sum benefit for hospitalization for treatment of COVID-19 and more than a dozen other infectious diseases such as antibiotic-resistant bacteria, Legionnaires’ disease, meningitis, Lyme disease and sepsis.
Colonial Life’s press release states that the plan is flexible with a wide range of face amounts to meet different needs. Coverage is available for up to 56 different serious conditions and treatment procedures, including heart attack, stroke, cancer, organ failure or coronary artery bypass graft surgery. Employees can further personalize their coverage with riders that provide additional benefits for infectious diseases, cancer, first diagnosis, heart procedures and progressive diseases such as Alzheimer’s disease.
To help Small and Medium Enterprises (SME) customers facing economic hardships during the pandemic, AXA Hong Kong had offered free COVID-19 related benefits which included cleaning and sanitising services from April to December 2020. Starting 1st September to 31st October 2020, Axa has extended the additional ‘Cleaning and Sanitising Benefit’ to designated home contents insurance customers for free. If policyholders of home insurance underwritten by AXA or anyone living at the insured address tests positive for COVID-19 during the coverage period, AXA will reimburse the home cleaning and sanitising expense up to HKD1,500.
Travel insurers and travel operators continue to offer COVID-19 insurance benefits. International airlines Virgin Atlantic and Air Canada have announced that they will offer free COVID-19 insurance for travellers and customers of their holiday service arms. Allianz Global Assistance is the insurance partner for both firms. Dubai based budget airline flyDubai has announced a similar benefit for their passengers, with claims assistance provided by local TPA NEXtCARE Claims Management LLC.
UK travel insurers who have also launched COVID-19 insurance in the past fortnight include tifgroup and Status Global Insurance. tifgroup has announced the addition of Covid-19 cover across a wide range of its insurance products. Tifgroup also trades under brand names Holidaysafe, Alpha, Insurancewith, and Postcard, and has partnerships with Boots and Holiday Extras. Status Global Insurance COVID-19 travel insurance is being offered through their Europsure Travel Insurance brand.
Much like COVID-19 travel insurance products covered throughout this series, the plans include hospitalisation and repatriation expenses, cancellation and trip interruption cover.
Covid-19 travel insurance features are becoming a standard now.
Business Insurance Solutions for the “Next Normal”
As the number of gig workers rises in the fallout of COVID-19, the question of their risk exposure in the absence of traditional protection such as unemployment or worker compensation insurance has come up.
US-based Synchrono Group is a digital P&C insurance-as-a-service provider, doing business under its trademark SynchronoSure®. The firm has entered into a partnership with B2B insurer American European Insurance Group (AEIG) for a product, GigBOP, designed for the ever-growing gig economy. Synchrono Group anticipates that small businesses will grow once again coming out of the current pandemic and that many new ones will be formed in response to permanent job loss related to the pandemic and economic fall-out.
GigBOP provides package coverage for business personal property, liability, professional liability, inventory and limited first-party cyber. The focus is on meeting the needs of small businesses operating in and around the Gig Economy, which may be home-based, operate out of small offices as tenants or co-working spaces. SynchronoSure®, through its proprietary underwriting technology, will underwrite and administer the business on behalf of AEIG in fourteen states.
Thimble, an insurtech start-up providing flexible insurance solutions for the small business segment, is one of the ten insurtechs selected in Cohort 5 of Lloyd’s Lab innovation accelerator program. Cohort 5 is intended to have a particular focus on COVID-19 products and solutions to help fast-track bringing these innovative solutions to market, and looking at new types of insurance to support the COVID-19 response.
Thimble, known for its instant insurance policies of flexible duration, will develop low-limit parametric contingent business interruption coverage to protect businesses from COVID-19 and future pandemics. By doing so, Thimble will position insurance as a “first line of defense” that pays small businesses immediately if specific criteria are met– essentially providing an “instant stimulus” while governments figure out the rest.
Thimble has launched other innovative tools to support their proposition through the pandemic. These include a partner API to quote small business insurance on any platform and a referral partnership with Hiscox for short-term liability cover in the microbusiness market.
The commercial real estate sector is facing new challenges due to volatility of their assets, pandemic risk exposure and overall uncertainty through the current crisis, for example, unoccupied office spaces and increased health and safety risks in commercial warehouses. Sompo Global Risk Solutions (GRS) has launched “Select Commercial”, a new customizable insurance solution for commercial real estate owners. The product is offered through a collaboration between Sompo International Holdings Ltd., a Bermuda-based specialty provider of P&C insurance and reinsurance and Marsh & McLennan Agency LLC (MMA).
MMA Select Commercial delivers industry-specific underwriting, claims, and risk control expertise for commercial real estate firms including office, retail and industrial customers in addition to warehouses, data centres and self-storage facilities. The flexible policy structure can include incidental hotel and habitational properties for the primary lines of coverage in diversified portfolios. Available coverage includes property, general liability, umbrella, workers compensation, environmental, commercial auto and parametric weather risk protection.
The pandemic has significantly changed driving habits of customers – perhaps for the long term. As usage-based insurance becomes popular, Australian insurer Suncorp’s car insurance brand bingle has launched “bingle go”; co-designed with insurtech Trov.
Bingle go includes an innovative proposition – the Mobility Bonus – through which customers can earn an extra 20% off their insurance premium by leaving their car at home and travelling on foot, bike or by mass transit. The Bingle go app uses telematics to smartly detect a customer’s mode of transport and their trip distance to determine qualifying journeys that all contribute to the Mobility Bonus. It also includes other features such as on-the-move cover for third-party property damage when commuting using a mobility device (like a skateboard, bike, e-scooter or walking) and personal valuables cover when commuting other than in a personal vehicle (like a customer’s headphones or laptop).
Per Suncorp, Bingle go is designed for how people live and move around today’s cities, including rewarding them when they don’t use their car.
Given COVID restrictions, Suncorp is running the pilot in Sydney, Brisbane and Adelaide, and will be offering heavily discounted bingle go cover for 500 customers.
In auto insurance, usage-based insurance adoption has been growing through the pandemic, as witnessed by the sales performance of different insurers.
During COVID-19, Canada based CAA Insurance’s pay-as-you-go program, MyPace, which discounts premiums if a vehicle is driven less than 9,000 kilometres a year, has seen a 50% month-over-month increase in enrolments in Ontario, over the last three months. CAA Insurance expects this trend to continue – as two-income, two-car households work from home, they are likely to shift to usage-based insurance for at least one vehicle.
In the UK, Zurich UK has reported that demand for pay-by-mile car insurance surged by 75% as millions continue to work from home. The data is based on Zurich partner By Miles – the pay-by-mile car insurance provider, whose policy sales in July 2020 jumped by 75% compared to the start of 2020. Zurich cites official statistics which suggest that more than 11 million UK workers may be able to work from home long term, or for some of their working week, with no need to commute.
Both CAA insurance and By Miles offer “pay-as-you-go” insurance as opposed to “pay-how-you-drive” plans that monitor driving behaviour. By Miles offers drivers insurance for a fixed fee starting from £170 to protect their cars against theft, accidental damage and vandalism while parked, with pay-as-you-drive costs starting from as little as 3 pence per mile.
Per Zurich, compared to an average annual premium of £460 paid for comprehensive policies, pay-by-mile car insurance policies could save drivers over £150 a year.
Following this trend, US auto manufacturer Ford has announced a partnership with pay-per-mile car insurtech Metromile to give drivers of Ford’s connected cars, a personalised pay-per-mile insurance offering. Owners of eligible Ford vehicles with built-in connectivity will be able to opt-in and connect their vehicle to Metromile for tracking miles. Ford’s announcement said eligible Ford owners can save $741 a year on average, according to a recent survey of new customers who saved with Metromile.
What lies ahead for the rest of 2020 for COVID-19 related innovation?
As we conclude this series, we leave with some predictions for the last quarter of 2020.
- In all likelihood, stand-alone COVID-19 health and travel products are gaining popularity and may soon become a standard. However, affordable pricing of these high-risk products in the face of rising infections may pose a challenge for insurers.
- More products such as usage-based insurance in North America and Europe and, work from home insurance and office sanitisation services pioneered in Asia may be adapted to other regions.
- As business resilience becomes the driver for commercial insurance, innovations which are currently in development such as parametric business interruption products and pandemic risk management tools can be expected to come to market by 2021.