Since 2019, the accident, health and life markets have all been subject to a tightening insurance landscape, with the trend continuing into early 2020. The arrival of the COVID-19 pandemic has not only further compounded the pressure these markets were facing this year, but also caused disruption which has lead to underwriters withdrawing from those territories and sub classes that have been hit the hardest.
accident health & life insurance

Our latest accident and health market update discusses the impact COVID-19 has had on rates, risk appetite and exclusions, whilst delving into the market outlook for the remainder of the year.

Throughout the course of 2019, the accident, health and life markets had been subject to a tightening insurance landscape, with this trend continuing into early 2020. The arrival of the COVID-19 pandemic has not only further compounded the pressure these insurance markets were facing in 2020, but also caused disruption to many classes of business.

The impact of the pandemic: rates, risk appetite and exclusions

Consequently, we have witnessed changes across a host of insurance markets since Q1 of this year, as carriers attempt to harness some stability to avoid potential losses. From an accident, health and life perspective, these changes include underwriters withdrawing entirely from sub classes and territories that have been the hardest hit by the global pandemic, less profitable classes being scaled back completely and wholesale alterations in risk appetite.

In the face of this market turbulence, rates have remained steady with no large increases to date. This has followed the pattern we have seen over the past few years, with the market taking a flat approach to rate rises, as opposed to large and sudden increments. However, as a precautionary note, terms and conditions within accident, health and life policies are being reviewed carefully by underwriters, which has been coupled with an apparent reduction in remunerations paid to introducers, brokers and MGA’s/MGU’s.

Exclusions within accident, health and life policies have been brought into the mainstream public narrative in recent months and as a whole, COVID-19 exclusions are being imposed as minimum, with some carriers opting for wider pandemic exclusions. There are however, a handful of carriers offering COVID-19 cover on a ‘case-by-case’ basis, thus renewing public optimism in how the insurance market can support individuals throughout the pandemic. Although, this comes as no surprise that there are no blanket coverages for COVID-19, whilst available cover carries higher premiums and stringent underwriting conditions for older lives with additional information being requested.

By large, the market does not appear to have suffered any substantial losses in respect of life or disability coverages, with even the medical expenses market not as widely impacted as first thought. Despite the satisfactory uphold of these markets, there have been considerable claims in the travel cancellation area and due to the interlinked nature travel has with accident, health and life, we do expect this to cause further disruption.

Market movers

The pandemic’s disruption has indeed caused several changes in market players, with a number of capital backers looking at the profitability of their investment. At the back end of last year, both ChinaRe and Vibe pulled out of the accident and health market and in 2020, market departures included the likes of Aspen, Markel and Starstone. The impetus to remain profitable has seen some players take a different approach through merger and acquisition activity. Both AmTrust and Pembroke were acquired by Canopius and Hamilton respectively. When looking ahead into 2021, Endurance have announced that they are withdrawing from Lloyd’s and directing their capacity to their company paper

Further changes are expected as a result of these market movers and we will keep you updated to what these will be.

From a people movement perspective, there has been a positive announcement with the Stephen Catlin led business, Convex, entering the accident and health market via the appointment of Craig Tyrell and forming an A&H team. Adding to this, Lancashire have recruited Tom Ing and MGA, Optio, have added Darren Delande to their ranks as they look to develop their A&H portfolio.

The 2020 vision – is the market outlook clear for the rest of year?

As COVID-19 claims carry on into the final quarter of the year, there is certainly some evidence that suggests the market may suffer further withdrawals, as well as a capacity realignment when heading into 2021. The closing of the Lloyd’s of London building and underwriting room provided the insurance sector it’s ‘new normal’ as it embraced a remote working environment that overall, proved successful. With reopening of the underwriting room on 1st of September, albeit at 45% capacity1 , it will be interesting to see how face-toface business is transacted initially and for the longer term.

Naturally and understandably, there has been a steady flow of accident and health enquiries for COVID-19 related cover, especially during in the early stages of the global outbreak. Amongst these enquires, two questions were predominately posed by clients that concerned:

  • a) COVID-19 triggering an Event and the impact on specific life policy event limits.
  • b) Business travel – clients were concerned if their policies covered medical expenses and cancellation of trips for travel booked before the pandemic.

When responding to these queries, it is vital to note that the majority of International Private Medical Insurance (IPMI) policies specifically exclude pandemic claims. Nonetheless, with business travel being highlighted as a prime ‘non-essential’ activity, travel estimates have reduced substantially, which in turn has started to reduce premiums.

Throughout the pandemic period, clients have reviewed their cover and looked at increasing event limits on life programmes. Supporting this, we have handled personal accident and illness policies including COVID 19, with increased deferment periods under temporary disability products.

As with all global changes, opportunity will arise – the accident, health and life market has seen the emergence of specific COVID-19 policies become available for companies and their staff that include set benefits upon diagnosis of COVID-19.

In addition travel related coverage is now widely available both for individual travellers and offered by airlines providing cover automatically for COVID-19 specific medical treatment

As with any accident and health or life insurance policy, we work closely with our clients to understand their individual needs, and whether a short-term policy meets their requirements. If so, we can act quickly to arrange suitable cover.