Possible Impact of Coronavirus Epidemic on the Insurance Industry

Must Read

Africa’s biggest grocery retailer, Shoprite exits Nigeria

Shoprite is exiting the continent's most populated country, Nigeria, after 15 years of operation. The retail giant initiated a...

List of Guaranty Trust Bank Sort Codes & Branches (with addresses) in Nigeria

The sort code is a number that usually identifies both the bank and the branch where an account is...

List of Access Bank Sort Codes & Branches (with addresses) in Nigeria

The sort code is a number which usually identifies both the bank and the branch where an account is...

The coronavirus disease also referred to as COVID-19 was initially reported in Hubei Province, China on 31st December 2019.

By 30th January, a public health emergency of international concern was declared by the World Health Organization (WHO) as 50,000 cases were reported globally. The virus was confirmed to be zoonotic, meaning it can be transferred between animals and humans with primary transfer through close contact, coughing or sneezing.

As a means to curb the global spread of this virus, the Foreign and Commonwealth Office (FCO) advised against all travel to Hubei province and against all but essential travel to the rest of mainland China. Recently, the WHO sent special delegates to china to speak with scientists as a measure to study, understand and tackle this outbreak. Among these delegates is the Director-General of the Nigerian Centre for Disease Control NCDC, Mr.Chikwe Ihekweazu.

While everyone is concerned about public health, insurance companies will also have to deal with another unique and direct impact of this outbreak. These include an increase in travel claims, business interruption claims and loss of revenue.

Travel Claims
- Advertisement -

In the light of the Foreign and Commonwealth Office (FCO) advice, there has been an increase in restricted entry imposed by certain countries and cancellation of flights by some international airlines. The possible outcome of this is a corresponding decline in the number of trips booked or taken and ultimately a reduction and even cancellation of travel insurance policies.

Generally, the risks covered by travel Insurance policies are medical treatment, repatriation, trip cancellations and emergency medical treatment while abroad. However, the type of cover can vary depending on the type of policy purchased and the company providing the cover.

Now, the question is, If hundreds or thousands of customers report claims based on the cover provided in their policy, can the Insurance companies cope with the sharp increase in a number of travel claims?

According to Owolabi Salami, Executive Director, Allianz Nigeria, Insurance companies need to remind their clients either via SMS or Emails on their travel Insurance coverage; what is included and what is beyond the scope. The communication should also highlight how they can claim for a refund where applicable. He also mentioned that insurers can take it a step further by sharing tips to customers on how to stay safe in the face of this epidemic.

Business Interruption Claims
- Advertisement -

Another possible claim increase that the industry might face is that of business interruption. In a situation where the business supply chain falls within countries with restricted access, the company will most likely suffer business interruption issues. For example, they might be denied access to a country which could mean failure to deliver materials essential for production. There might also be an absence of key staff which might again interrupt usual business activities. It is, therefore, safe to assume that there will be a rise in the claim in this regard since business continuity is at risk of interruption.

Apart from the impact of coronavirus on many lives, businesses whose supply chain falls within the countries of restricted access may suffer business discontinuity. Business discontinuity arising from denial of access, failure to deliver parts or materials essential for production or absence of staff crucial in the supply chain. Consequently, Insurers may witness a rise in a claim for business continuity.

Read Also:  DHL Expands Africa EShop Online Shopping Application To 34 Countries Across Sub Saharan Africa
Revenue Loss

Another impact of the outbreak of this virus is the cancellation of sports, music or other social events. Countries are working towards reducing the influx of foreigners in their communities while local event organizers are wary about hosting people.

Similarly, citizens are beginning to get extra selective about where they go and events they attend. Last week, the Japanese sporting events were held without spectators. One game, in particular, featured one of Japan’s oldest and most popular team which usually attracts a crowd of people in a 55,000 seats capacity stadium in Tokyo. Unfortunately, no spectator showed up for this event.

- Advertisement -

Other large-scale events are being contained to hold within closed doors or locally and all of these translates to a loss in travel insurance revenue for the insurers added Owolabi Salami, Executive Director, Allianz Nigeria Insurance Plc.

It is therefore advisable for insurance companies to keep these in mind while creating strategies to mitigate possible effects of the coronavirus in Nigeria.

- Advertisement -
Possible Impact of Coronavirus Epidemic on the Insurance Industry - Brand SpurPossible Impact of Coronavirus Epidemic on the Insurance Industry - Brand Spur

Subscribe to BrandSpur Ng

Subscribe for latest updates. Signup to best of brands and business news, informed analysis and opinions among others that can propel you, your business or brand to greater heights.


Please enter your comment!
Please enter your name here

This site uses Akismet to reduce spam. Learn how your comment data is processed.

Possible Impact of Coronavirus Epidemic on the Insurance Industry - Brand SpurPossible Impact of Coronavirus Epidemic on the Insurance Industry - Brand Spur

Latest News

Local Investors Turn Bears To Meet Up Regulatory Funding Obligations

KEY INDICATORS FGN Bonds The FGN bond space started on a very bearish note triggered by selling actions from some local...

VIDEO: Coca-Cola’s Impact In Nigeria Might Be More Far-Reaching Than You Know

For a company as long-standing as Coca-Cola, it is quite remarkable that it has managed to stay well within the times, adapting to different...

A Decade in Peerless Excellence – GTBank is Nigeria’s Best Bank for a record extending 10 Times

Guaranty Trust Bank Plc (GTBank) has long been regarded by industry watchers as one of the best run financial institutions in Africa, a reputation...

Diageo profits plunge 47% as pandemic hits global demand

Diageo today admitted profits for the past year plunged 47% hit by the closure of the on-trade activities and the cancellation of sports events...

Diageo Plc announces change to its Board of Directors

Diageo announces that Ho KwonPing will retire as a Non-Executive Director, effective 28 September 2020. Ho KwonPing has served on Diageo plc’s Board of Directors...
- Advertisement -
BrandsPur Weekly Cartoons
- Advertisement -Possible Impact of Coronavirus Epidemic on the Insurance Industry - Brand SpurPossible Impact of Coronavirus Epidemic on the Insurance Industry - Brand Spur