Page 16 - Insurance Times March 2021

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Business interruption cover is underwritten by Allianz, all five to increase. This could be essential for
of the leading insurers in the UK were insurers as the number of businesses
ruling from supreme court included in the FCA’s investigation and and employees is likely to drop in 2021
may save insurers’ will now have to payout claims. due to the economic impact of the

reputations in long run Ben Carey-Evans, Insurance Analyst at pandemic, so raising penetration rates
GlobalData, comments: “This ruling is could counter that.”
The UK supreme court has adjudged
great news for the SMEs who had a
that the insurers will have to pay small very stressful year and had extremely General insurance
firms for their COVID-19 losses, which
stretched budgets. It is likely to hurt
will hit the profits in the short-term. industry in Australia to
Consequently, this decision may save the insurers in the short-term, but as reach US$67bn in 2025
the collapsing reputation and trust of the data shows, SME customers have
the insurers in the industry in the long- already been turning away from the The general insurance industry in
term, says GlobalData, a leading data insurers because they didn’t believe Australia is projected to grow from
and analytics company. they would pay out. Given that this was AUD76.3bn (US$51.8bn) in 2020 to
in 2020 when nothing had been AUD98.0bn (US$66.9bn) in 2025, in
GlobalData’s 2020 UK SME Insurance confirmed, it is likely that many more terms of gross written premiums
Survey, conducted in Q3, found that
would have cancelled in 2021 had the (GWP), according to GlobalData, a
some damage had already been done supreme court allowed the insurers to leading data and analytics company.
by the stories of insurers refusing to deny the payouts for the pandemic."
pay out. The data suggest that out of GlobalData’s insight report, ‘Australia
those SMEs who had cancelled the COVID-19 has been very difficult for General Insurance: Key Trends and
business interruption policies in 2020, insurers but paying out claims and Opportunities to 2025’, reveals that
over a quarter (25.6%) did so because showing that it can offer much needed the general insurance industry in
the policy did not provide the level of financial support in times of crisis will Australia is expected to grow at a
cover they thought it did. A further show how essential it can be. While compound annual growth rate (CAGR)
23.1% said they had a coronavirus paying out much later, and when of 5.1% over FY 2020–2025, supported
claim rejected by their provider which forced to, may not be a great look, it by the gradual economic recovery
means that just under half of those is far less damaging than had they not. following the slowdown due to the
who had cancelled the policies, did so Carey-Evans concludes: “It is likely that COVID-19 pandemic and growing
as they felt they had insufficient many businesses will be scarred by demand for insurance against natural
coverage. what happened in 2020 and will look disasters.
The top five business interruption to make sure they are fully covered for Deblina Mitra, Insurance Analyst at
insurance providers for SMEs in 2020 anything preventing them from doing GlobalData, comments: “The
are AXA, Aviva, Zurich, Barclays and business in the future, and SME lockdown restrictions due to the
Allianz. As Barclays’ SME business insurance penetration rates could start COVID-19 pandemic and extreme

16 The Insurance Times, March 2021