Insurance brokers from Trusted Union Hong Kong give their view and how COVID-19 will impact the insurance industry.

The COVID-19 outbreak began in Wuhan, China in late 2019 and has rapidly spread all over the world causing massive disruptions to individuals and businesses all across the globe. In major cities across the world, citizens are locked in their homes and businesses have shuttered their doors - some temporarily, others… forever.

The long term social and economic impact of this pandemic still remains to be seen but there is no doubt the changes will be massive and widespread. Rather than actually changing the social and economic structures of our society, it appears that the pandemic is accelerating transformations that were already happening (ie. the shift to digital).

With offices and gyms closed and large gatherings like concerts suspended, people around the globe are embarking on one of the biggest digital transformation experiments en masse. White collar workers are working from home. Fitness enthusiasts are joining their favourite workout classes through video conference software, and young people are socializing and attending events virtually on platforms like Fortnite or Animal Crossing.

Whether these changes stick permanently after lockdowns are lifted is anyone’s guess. We’re not experts on those topics but we ARE experts on insurance. We took a poll around the office (remotely) and here are our thoughts on how the COVID-19 pandemic will impact the insurance industry going forward.

COVID-19’s Impact on the Insurance Industry in General

The pandemic has impacted all businesses and the insurance industry is no exception.


Health Insurance


One of the biggest challenges we see with Trusted Union and our insurance partners was a transition to remote work. Some were better positioned than others to make the mass transition to work-from-home (WFH) but others were slower to adapt due to technological and cultural limitations. This has led to some disruptions and delays in servicing from certain insurers, an increase in claims activity and a disruption in some brokerage/agent networks that usually relied on face-to-face meetings and weren’t prepared for the pivot online. We don’t see face-to-face disappearing but long term, we expect to see a rapid digitization of sales channels opening up new direct sales opportunities.

We had considered the impact on the overall economy and stock market volatility on solvency and liquidity but our industry is well-capitalized. The insurers we work with still have headroom and insolvency is not something we predict. That said, we could see consolidation as insurers with the stronger balance sheets look to take advantage of the situation and grow market share.

COVID-19’s Impact on Life & Health Insurance

We’ve written extensively about this topic on our blog and email newsletter but the message warrants repeating. We are very encouraged to see our insurance partners and those around the world stepping up to extend coverage for COVID-19 related costs. In China, some insurers are even offering free policies with limits of roughly US$10,000 each to agents to distribute to their customers. Similar extensions to cover were also seen in Singapore and Hong Kong despite the relative safety of these areas. Some are even offering COVID-19-specific coverage as a standalone product.

In terms of claims, it’s hard to call. Mortalities rates could grow significantly but it takes time for the full picture to become clear. But the actions insurers are taking (ie. offering free testing and removing barriers to healthcare access) will certainly help reduce the spread of the virus.

COVID-19’s Impact on Property & Casualty Insurance

Outside of those directly affected by the illness, businesses around the globe are seeing their revenues crushed. Gyms are fully closed and restaurants in most areas are working purely off delivery and takeout services. Commercial insurers are seeing their customers unable to pay their monthly premiums on time or even scaling back coverage to save costs. The overall impact will depend on how bad this pandemic gets and the extent and duration of containment measures. If this sparks a prolonged recession around the world, we would also expect the total volume of commercial insurance premiums to drop.

That said, it’s not all bad for property & casualty insurers. What we’re seeing is a sharp decrease in the number of claims as more people stay home and there are fewer people driving on the road. With most business interruption policies also excluding pandemics, insurers are seeing limited exposure in these areas.

Final Remarks

A lot of how this plays out in the long term depends on decisions made by insurers, customers, brokers/agents, and regulators around the world.

We see digitization and automation of operations and client interactions (something we’ve been working on all of 2019) for greater cost efficiency and resilience. We also see many businesses scale back physical offices and move people more towards remote work which may have knock-on effects on the insurance industry via the real estate market.

The second thing we predict is that insurers, regulators and clients will place their sights more squarely on continuity planning and stress testing. I have no doubt that we’ll all learn a lot coming out of this challenging period.

More broadly, we think this COVID-19 pandemic will spark a debate about the role of insurance in society in supporting individuals and businesses through challenging times. For a long time, the insurance industry has worked in the background providing a stabilizing force protecting individuals and businesses from all manner of risk. Just like how the Great Fire of London in 1666 gave rise to fire insurance, this pandemic may give rise to new solutions on how to address some of the biggest societal and structural risks we face in our modern economy.