5 new COVID-19 insurance industry trends you should know to keep your business relevant and successful.
Coronavirus has affected all of our lives. Kids who normally attended school had to learn how to learn from a distance. Adults had to adjust to the lack of childcare. Some of us have been able to work from home (like all of us at Blitz Sales Software) while others are unemployed. Unsurprising, then, is the number of new insurance industry trends that have come about as a response to COVID-19. Here are five of the new ones that insurance agents should keep on their radar.
Business Insurance Industry Trends
First, many businesses are currently enduring some financial stress due to mandatory government shutdowns or partial shutdowns. To remain afloat, they’ve been operating on thin margins. Restaurants, for example, have been relying on food delivery options such as Uber Eats or DoorDash to stay in business, even though operating through the food delivery apps comes with expensive fees.
Insurance agents who sell business insurance should keep the following in mind. According to a white paper published by Worldwide Facilities, LLC, underwriters are asking about:
- Possible bankruptcy
- Stress testing
- Business continuity
- Positive cash flow generation
- Ability to meet current debt covenants
Specific questions pertaining to COVID-19 include whether the company has performed stress testing, if staff is able to perform at the same level while working remotely, and whether there have been staff layoffs.
Exclusions on new and renewal business quotes will also be more restrictive. You can expect to see creditor/bankruptcy exclusions, prior acts exclusions, and even COVID-19 exclusions.
As for premiums, they’re up 10-20% on a stagnant year over year risk. Accounts with high debt to equity are seeing premiums up 25-100%.
Trends in Life
The next insurance industry trend to note is that the demand for life insurance has never been higher. According to Byron Udell, the president of AccuQuote, his company has had to hire more agents to keep up with the influx of applicants as applications are up 35 to 50%. Similar to business insurance providers, life insurance agents are asking applicants more questions related to COVID-19. These include questions about:
- Age. Elderly people are considered more susceptible to COVID-19. US News referenced an insurer who will no longer issue policies to people age 70 or older, no matter their state of health.
- Travel. Any applicant who travels outside of the country is being asked to wait 30 days after they’ve returned before applying for life insurance.
- Positive COVID tests. Some insurance agents are directing applicants who’ve tested positive for COVID-19 to wait a month before applying. They have to be symptom-free for a month before they can get a policy.
Getting a life insurance policy is becoming increasingly difficult. People with prior health issues may not be able to get coverage and premiums are going up. In order to provide relief to clients whose life insurance is through their work, some insurance agencies are permitting employers to continue coverage for their furloughed or temporarily laid-off employees sometimes for up to 12 months. Senior Vice President and Head of Insurance Solutions at New York Life Aaron Ball has said they’re working to ensure that “no existing policy owner loses their life or long-term care insurance coverage during the next several months because of a financial hardship caused by COVID-19.”
Trends in Auto Insurance
Right now, fewer people are buying cars. They’re either not driving much because of the restrictions, or they’ve lost their job and they’re being cautious with their money. States with the highest coronavirus cases have the lowest shopping volumes. As a result, auto insurance has declined to -11% year-over-year growth, its lowest in a while. The Insurance Journal identified the following insurance industry trends:
- The most affected auto insurance shoppers are age 35 and younger. Their growth rates are down by more than -20%
- Direct and independent agents have experienced the largest hits in growth, at -26 and -24%.
- Exclusive agent carriers took a hit of -9%
Auto insurance carriers have been making moves to stabilize, however. Tanner Sheehan, associate vice president of auto insurance at LexisNexis Risk Solutions, noted that carriers have been giving money back and pausing the cancellation of policies for non-payment in an effort to “stabilize these shifts and help it rebound.”
Trends in Global Insurance
Because of the pandemic, all insurance sectors globally have been moved to a negative outlook. These include life and non-life, US health insurance, global reinsurance, and title insurance. The good news is that most non-life and reinsurance won’t be hit too hard by asset losses because they have enough capital to absorb them. Most companies are also anticipated to have COVID-19 claims costs be more an earnings event as opposed to a capital event.
Although many insurance agents are struggling with the uncertainty of this time, right now is the best time to reach out to current clients. People aren’t interested in shopping around for other insurance providers at the moment. That’s why you should be using this time to strengthen your relationship. Send your clients an email or give them a call and ask how they’re doing. Right now might be uncertain, but being aware of these COVID-19 insurance industry trends will enable you to be that point of certainty and stability in your clients’ minds.