Response to coronavirus outbreak - Insurance sector - Lansons

Insurance sector
response to
coronavirus
outbreak
As of 8th June 2020

Insurance Sector Summary

                       01           Executive Summary

                       02           Major announcements

                       03           Media and commentator sentiment

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Executive summary

For the first time in weeks business interruption insurance has slipped down the news
agenda. Unsurprisingly, as restrictions have lifted in the UK and across Europe,
attention has turned to travel and car insurance. Insurance competitors have
stepped up their media engagement on car and home insurance, with a number of
providers making a return to the news with data-based stories indicating how
coronavirus has led to a change in people’s behaviour. While travel insurance stories
have increased in volume, travel insurers have not directly commented on the issue,
instead leaving the ABI to step in to provide comment.

Car insurance providers have increasingly capitalised on newshooks to generate
coverage. For example: RAC highlighted the threat of penalty points for those using
their phone while in line for newly reopened drive-throughs; LV= used call-out data
from Brittania Rescue to highlight the risk of dead batteries after long periods of not
being used; the AA reminded drivers that their insurance may not cover them for
vandalism and Admiral announced a spike in accidents as ‘rusty’ drivers get back
on the roads for the first time in weeks.

Car insurance competitors and aggregators like Go Compare and
Moneysupermarket/ ByMiles, have also steadily started to increase their PR activity.

The FCA confirmed guidance for motor insurers on providing value to customers, but
this wasn’t widely covered.

Home insurers have also issued news in keeping with the mood of the country –
Aviva, Admiral, AXA, Direct Line and Halifax all noted that there had been a sharp
increase in fires related to BBQs during the recent heatwave, while Sun Life
highlighted the potential need for people to update their home insurance, if they
made any big ticket purchases during the lockdown.

Continued confusion around travel restrictions has led to a significant increase in the
number of articles on the issues facing travellers this summer. Differing policies, and
questions over who covers what, and who can claim were the focus of a number of
pieces over the past week. An article from Martin Lewis in MSE, repeated in the Mirror
and Sun, drew attention to the fact that those with pre-existing conditions may be
able to claim on travel cancellations, a fact supported by comments from the ABI. A
piece in the Times notes that some of Britain’s largest insurers are refusing to accept
new customers if they have cold or flu-like symptoms, while key workers may also
have to wait before an insurer will cover them. With much ambiguity from the
government and from providers on the subject, many publications (Sun, BBC,
Telegraph) have published Q&As to help readers better understand the parts at play,
while others have turned to consumer websites like Protection Guru (the Times) to
compare how different providers have adapted their policies.

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Executive summary

Meanwhile on social media personal finance writers, like Ruth Emery (Times Money
Mentor), have vented frustration about the barriers insurance providers are putting
up to claiming – posing the question “what’s the point of insurance”, which act as a
trigger for further reputational damage to the sector.

As airlines begin to get back to more regular services, continued confusion around
who is liable on travel disruption and a lack of clear communication from most travel
insurance providers mean it’s a story that will continue to be reported on over the
coming weeks.

Top pieces of coverage w/c 01.06

►   Car breakdown experts reveal major issue caused as drivers ‘haven’t been using
    their cars’ – The Express (Luke Chillingsworth) – 4t h June

►   Coronavirus and travel insurance — cold symptoms could deny you cover, The
    Times (Ali Hussian) – 6t h June

►   Martin Lewis reveals travel insurance loophole that could see some cancel
    holidays and get refunds The Sun (Helen Knapman) – 6t h June

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Major announcements

Key stories and competitor updates

►   [08.06] New research by insurtech By Miles and Moneysupermarket.com indicates
    that 19.3 million drivers may be overpaying their car insurance. The stats revealed
    that motorists driving less than 7,000 miles a year are paying a penalty of £180, on
    average, compared to drivers who surpass that threshold. This is Money

►   [08.06] The cost of buildings and contents insurance has risen 0.5% in the past three
    months to an average premium of £151, research from Consumer Intelligence has
    shown. The research uncovered that 14% of homeowners are now considering
    cancelling their contents insurance due to the increased amount of time
    policyholders are spending at home. Mortgage Introducer

►   [08.06] Car insurance premiums could be reduced after lockdown restrictions are
    eased by purchasing a selection of cheaper vehicles. Mark Greening, car
    insurance expert at GoCompare explained that this is due to the fact insurance
    rates are mainly defined by the size and insurance group a car is placed in. Daily
    Express

►   [05.06] Hiscox Action Group announced that they are launching a £52 million
    action lawsuit against Hiscox Insurance. Law firm Mishcon de Reya, wrote to Hiscox
    on behalf of the 397 group members seeking payment of £52 million of unpaid
    business interruption claims plus “additional claims and costs” caused by Hiscox’s
    “unreasonable delay” in settling these claims. Insurance Business UK

►   [05.06] Admiral Insurance has noticed a 39% spike in accidental damage claims
    amongst drivers since lockdown measures have been eased. Admiral note that as
    rusty drivers return to the roads, this figure is set to increase. This is Money

►   [04.06] Aviva, Admiral, AXA, Direct Line and Halifax home insurance have all
    noticed a sharp increase in fire claims from barbeques and bonfires. Aviva
    published a guide to help the public stay safe. This is Money

►   [03.06] After the FCA outlined its guidance on wording that could implicate
    insurers in paying BI claims, AXA have announced that over 1,700 of their
    restaurant contracts may be subject to payouts due to unclear wording. AXA
    have offered limited compensation, yet only 200 firms have agreed to this. Reuters

►   [03.06] Direct Line have released a new survey revealing that more Britons are
    drinking more during the coronavirus lockdown, with an estimated 250,000 having
    their first drink before midday. The survey outlined that people are leading
    increasingly unhealthier lives as a result of the pandemic. Independent

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Major announcements

Association of British Insurers (ABI) Updates

►   [05.06] Hugh Savill, Director of Conduct and Regulation at the ABI commended
    the FCA on its next steps to improve the defined benefit pension transfer market -
    this includes a ban on contingent charging.

►   [04.06] The ABI welcomed a new government-backed temporary reinsurance
    scheme so businesses can continue to access trade credit insurance. James
    Dalton, Director, General Insurance Policy “Since we alerted the Government of
    the need for it, we have worked closely with them to make it a reality. Maintaining
    cover as far as possible between suppliers and their clients will be a key
    component in allowing the UK economy to overcome the challenges of the
    current crisis.”

►   [01.06] Insurance giants Allianz, Admiral, Aviva, RSA join forces with 40 law firms,
    medical reporting agencies and rehabilitation providers to commit to the
    Association of Consumer Support Organisations’ (ACSO) and the Association of
    British Insurers’ (ABI) brokered statement of intent, ensuring personal injury claims
    must be settled quickly amid the pandemic. Agreed measures include remote
    medical examination and rehabilitation and extending the negotiation period.

Regulatory updates

►   [03.06] The FCA has directed insurance firms to consider the impact of coronavirus
    on the value of their products. In the guidance, the FCA set out what it considers
    firms should be doing to “identify any material issues from coronavirus that affect
    the value of their products, and their ability to deliver good customer outcomes.
    The regulator defined product value as “what the customer is paying for and the
    quality of the product or service it is intended they receive”.

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Media and commentator sentiment

Overview

Over the past week the media focus has shifted towards helping to inform customers
about their rights and how to save money on their insurance, looking at travel and
car insurance. The FCA is due to update on its ruling regarding BI insurance in July
and we expect the media will closely monitor its decision over the coming weeks.

Media commentators:

►   [02.06] Gareth Shaw discussed in iNews, how working from home affects car
    insurance if you are still using it to visit colleagues. He states that “In practice, most
    insurers would be fairly reasonable about your situation. You don’t have to advise
    your insurer if you’re having to drive more because taking public transport, for
    example, is not possible. Get in touch and explain your situation, and see what
    your insurer says, but I doubt you’ll have to switch to a business policy.”

►   [03.06] In light of the FCA action regarding business interpretation insurance,
    Richard Bursby, partner at Taylor W essing said “The FCA’s process for this action is
    moving at warp speed. This is necessary so that policy holders can quickly
    understand their position once the court clarifies some of the key issues around
    what is covered, 'The FCA are aiming for a hearing in mid-July. However, policy
    holders have just days to review their policies against the FCA's representative
    sample. Taylor Wessing is proud to assist hospitality in this initiative, as legal experts
    in a sector that has been hardest hit by the pandemic and currently has had little
    by way of insurance pay-out.”

►   [06.06] Martin Lewis has urged holidaymakers to check their travel insurance as a
    loophole means people with pre-existing medical conditions maybe be able to
    cancel and get a full refund. MoneySavingExpert.com, encourages people to
    speak to their insurer as if your condition means you're at greater risk of being
    affected by the virus you may be able to cancel your trip and get your money
    back.

►   [08.06] James Blackham, co-founder of By Miles says the unfairness of the system
    was clear to see as he pushed for a system where motorists paid less for travelling
    less. Insurers must stop inflating premiums for lower mileage drivers to subsidise the
    higher claims costs of higher mileage motorists and start actively rewarding
    people for driving less. “The technology needed to log the actual miles
    completed by drivers already exists, and it’s unfair to keep overcharging low
    mileage drivers just because that data isn’t being properly taken into account by
    insurers.”

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