31 Jul 2020
Posted in Insurance
COVID-19 will be most expensive phenomenon ever to hit insurance world
A critical factor affecting the insurance industry will be a drop in life expectancy, which is set to emerge as a large source of burden for insurers, according to GlobalData, a leading data and analytics company. Poorer health outcomes will lead to more insurance claims, as well as fewer individuals taking out insurance due to increased unemployment, are both anticipated to result in higher insurance premiums.
According to GlobalData’s report, ‘Critical Illness – United Kingdom (UK) Protection Insurance 2020’, COVID-19 has led to a backlog in cancer care. This will lead to more insurance claims being made by customers, which is expected to cause an increase in premiums as insurers will want to hedge themselves against risk.
Kerem Ozenc, Insurance Analyst at GlobalData, comments: “The state of the economy may further impact health. As the UK and the majority of the world’s countries fall into recession, unemployment rates will increase massively, which will have a negative impact on life expectancy.
“The reduction in life expectancy is set to increase life insurance premiums in the coming years. As people are living for fewer years, premiums will need to be spread out over a shorter duration, thus increasing yearly fees. Insurers may also wish to increase premiums if they are expecting to be hit with a wave of claims from customers.”