It’s Time for the Insurance Industry to Become Part of the Solution

The current situation with COVID-19 is unprecedented, and the impact it is having on our economy and our way of life is greater than most could have imagined a few weeks ago. Every industry worldwide is hit by these events, and the time to come together and act is now. The initial wave of affected businesses includes many small businesses that cannot afford to be closed for long and will be looking to their insurance companies for assistance through this troubling time.

The insurance industry exists to help its customers manage challenges and protect their assets in catastrophes, which seems like the perfect job for the situation we find ourselves in now. But insurers are once again holding up their policy exclusions like shields to ward off the claims coming from those on the front lines of this pandemic. Rather than take the expected path and challenge these claims outright, eventually traveling through the courts to claim denial and bad press, the insurance industry should start looking for ways to help customers. There is another option that can not only preserve the integrity of the contract but also raise the visibility of the industry through government partnerships, clear communication, and industry solidarity.

  • Working with government agencies to respond to this crisis ensures that regulatory buy-in exists from the beginning. Insurance companies can work with lawmakers to create a response that will help policyholders without undermining the validity of the contract. Work for a solution for this issue now, and work on creating a better contract later.
  • Communication has not been the industry’s strong point in the past, but this is the time to mend that and master the art of clear, concise communications. Customers deserve to hear from their companies, and messaging needs to be easy to understand and interpret. Work through the legal-ese and make your case, then follow up with an attempt to communicate what can be done rather than what cannot.
  • Finally, the only way to get through this without tarnishing the industry further is to work together and craft a response that speaks for all. If the industry collaborates and speaks with one voice, then the messaging is more powerful for both the customers and the lawmakers.

The policy exclusion cat is out of the bag at this point, so the industry needs to act fast to help manage the message. Expected decreases in vehicle claims could become the basis for an industry response without breaking the bank. Focusing on an industrywide solution (through a pool of funds combined with a government partnership or backstop) that can help customers manage this crisis will go a long way toward enshrining insurance companies as partners instead of adversaries.

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