While there have been many major and tragic events across the decades, there has never been a year like 2020 – with a major bushfire season, storm events and now a global pandemic.
This year every business has been racing to adapt to the latest restrictions and what is now considered “the new normal”. Research by QuickBooks Australia and conducted by YouGov has revealed 63 per cent of small businesses report being negatively impacted by COVID-19 and 41 per cent experienced a 50 per cent or more decline in revenue in the first quarter of 2020. Small businesses are not alone – 2020 has tested every business continuity plan to be proven true or false.
The impact of COVID-19 on the insurance industry
The long-term impacts of COVID-19 on the insurance industry are too early to call, however short-term, the pandemic could have a flow-on effect to capital availability. The collective reduction of small business’ financial assets – fuelled by weakening economies – could lead to a hardening of insurance premiums and coverage.
Even prior to the pandemic, Gallagher Bassett and many finance sectors were forecasting the market was hardening, result in higher insurance premiums and more restrictive coverage for most buyers. The pandemic is likely to accelerate this trend and build on the social factors contributing to the “hard”’ insurance market, such as the increasing likelihood of people lodging claims and costly catastrophic events.
What’s next for the insurance industry?
The biggest lesson out of the pandemic is that every employer should engage a broker and an insurer. Maintain healthy housekeeping, understand your business and partner with a reliable broker and insurer to make it happen.
Learn from the success or downfalls or your organisation’s continuity plan and revisit your insurance coverage if your policy failed to provider adequate coverage throughout the pandemic. An insurance broker can help you to assess and manage your risks and provide advice on insurance solutions where appropriate for your needs – taking the complexity out of your policy. Your broker plays a crucial role in clearing up ambiguity in wording and can advise your business on the gaps where additional limits and offerings may need to be obtained.
Post-pandemic, the right insurance cover is the oil that gets the economic wheel turning for your business and employees, should the events of 2020 occur again in the future.
Jon Winsbury, Executive Vice President – International, Gallagher Bassett