INSURANCE>>
Where Do We Go From Here? The virus litigation sport is just beginning... by Andy Schwartze Insurance brokers who finally gave up being sales people and transformed themselves into well-grounded risk managers, are constant observers of how the industry works and what factors drive it in different directions. This is important because insurance is a variable cost, determined annually — and not one that is easily predicted.
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lients need to understand the driving forces that impact insurance costs. If there is one simple statement that can be made about the entire financial services industry it’s that when the economy goes in one direction, financial services go the opposite way. Banks and insurance companies are in the business of protecting their assets against the onslaught of nasty economics. They are not in business to cure society’s ills and take great care to shield themselves from unexpected raids on their balance sheets. This is nothing surprising; the days of saying “I’ll take my business elsewhere” have become somewhat obsolete in 2020. The viral troubles that have beset the world since early spring do not bode well for insurers. As financial pressures close in on struggling businesses their owners and managers fight to find ways to survive and
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get through the rough times. One of the possible ways to generate badly needed funds is to re-visit insurance contracts, in an effort to see if there are claim possibilities that, in good times, might have been ignored or overlooked. Indeed that rather scary reality, for insurers, is now starting to ramp up. It is still early in the game, but if you watch carefully you will see significant momentum beginning to build as the opponents line up and prepare for the inevitable battle. Here are some indicators that point to growing troubles for the property/ casualty insurers: By the end of March, Munich Re, one of the biggest in the world, had already reported 800 million Euros in COVID-related losses. In Canada, Intact, Travelers and Aviva have already announced unexpectedly higher claims, not only related to the virus but also to
