By Anoop Khanna
The International Association of Insurance Supervisors (IAIS) has cautioned against initiatives seeking to require insurers retroactively to cover COVID-19-related losses, such as business interruption, that are specifically excluded in existing insurance contracts.
The association that represents insurance supervisors and regulators from over 200 jurisdictions has said, “In such cases, the costs of claims against losses have not been built into the premiums that policyholders have paid for their insurance.
“Requiring insurers to cover such claims could create material solvency risks and significantly undermine the ability of insurers to pay other types of claims. Such initiatives could ultimately threaten policyholder protection and financial stability, further aggravating the financial and economic impacts of COVID-19”
In a press statement issued on 7 May 2020, IAIS said, “Where pandemic risks are covered by a policy, insurers should pay out such claims in a prompt and efficient manner.”
IAIS has said that this widespread pandemic has highlighted the limits on the types of coverage that can reasonably be offered by the insurance sector alone. Under such circumstances, the pooling and diversification of risks necessary to support viable insurance cover are difficult to achieve.
“The IAIS, therefore, encourages efforts seeking potential solutions to protect businesses and individuals against these types of risk, and stands ready to help facilitate these discussions at the international level,” the statement said.
Asia Insurance Review