From the Editor's Desk
Top insurance leaders share their thoughts about how the pandemic will impact the industry going forward. Also, a look at New York Life’s 175-year history and an examination of business interruption insurance litigation.
- Patricia Vowinkel
- September 2020
The course of the insurance industry has been marked by milestone events—hurricanes, terrorist attacks, legislation, economic crises and more.
Add pandemics and related shutdowns to that list.
As COVID-19 rapidly spread global disruption, changes throughout the insurance world followed. Developments that might have taken years under normal circumstances were adopted by many insurers in days, weeks or months.
To explore those changes, and how to better meet the next big challenges, Best's Review and AMBestTV teamed up for a cross-media project called “An Industry Transformed.” For this four-part package, we assembled industry thought leaders to discuss technology, relevance, innovation and future solutions.
“Digitally Native, Not by Choice” looks at how the pandemic has affected digital strategy. As the lockdowns spread, insurers were forced to shift to a virtual environment or close. “The velocity of decision-making that led to the crisis management is also something that was quite new for many carriers,” McKinsey's Tanguy Catlin said. “They don't want to go back to the old ways of taking months and years to make important decisions.”
Ordered to close because of COVID-19, businesses and organizations queried their brokers and scoured their policies to see if they were covered for business interruption. For most, business interruption was excluded because it was pandemic-related. Considering the scale of possible loss, the industry lived to insure another day. But it also put its brand at risk by becoming known as an industry that loves to exclude risk. In “Defending Relevancy,” the University of South Carolina's Robert Hartwig said history shows that insurance remains an industry that exists to solve problems. “Over time, the industry will demonstrate its continued relevance as it has for hundreds of years,” Hartwig said.
“Innovation Now” looks at how the pandemic has spurred innovation. Some organizations are more innovative than others, giving them a head start on meeting a changed world. AM Best has been vocal about the need to foster insurance innovation. “With all the changes and the escalation, and the speed of those changes, with data, technology and society and the climate, innovation becomes that much more important to a company,” said Matthew Mosher of AM Best Rating Services.
“Reaching Beyond the Industry” explores public-private partnerships. Given that possible losses from the next pandemic, widespread cyberattacks or other large-scale perils could outstrip the total capital available to the entire insurance industry, one solution is to build risk partnerships between the industry and governments. “You're going to need every ounce of capital and capacity behind this that you can possibly get,” Barry Gilway of Citizens Property Insurance said.
In “Past as Prologue,” New York Life CEO Ted Mathas explains how the company's 175 years have positioned it for the next century or more.
In “Before the Bench,” we examine business interruption insurance litigation related to COVID-19. While insurers contend policy language and pandemic-related coverage exclusions are legal and clear, plaintiffs' attorneys take a different view.