"Payment Deferrals and Premium Discounts"... Major Regulators Strive to Respond to COVID-19

Korea Insurance Research Institute
'Major Countries' Supervisory Authorities' Responses to the COVID-19 Shock' Report

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[Asia Economy Reporter Ki Ha-young] To mitigate the impact of the novel coronavirus infection (COVID-19), supervisory authorities in various countries have responded with three main goals: continuity of insurance services, solvency ratio and liquidity management, and support for policyholders. Their flexible response is credited with contributing to financial market stability.

According to a report titled "Responses of Major Countries' Supervisory Authorities to the COVID-19 Shock," recently published by the Korea Insurance Research Institute on the 9th, major supervisory authorities have provided support to policyholders affected by the spread of COVID-19 by offering measures such as reducing uncertainty in insurance claim payments, supporting vulnerable groups affected by COVID-19, and providing additional coverage for COVID-19 victims.

First, financial authorities issued guidelines regarding coverage related to losses caused by COVID-19. For example, New York State in the United States required explanations to policyholders about COVID-19 loss coverage under commercial property insurance or business interruption insurance. In countries like the United Kingdom, Canada, and Germany, industry associations also provided guidelines on whether insurance products cover or exclude losses caused by COVID-19.

Additionally, countries offered financial support and grace measures to policyholders vulnerable to COVID-19. Typical measures included providing premium payment deferral periods, changing insurance contract terms, and adjusting premium payment methods.

Domestically, loan maturity extensions and interest repayment deferrals were implemented for small and medium-sized enterprises and small business owners affected by COVID-19, and support for disaster-affected companies was designated as an exemption. Furthermore, to support the struggling low-income economy due to the spread of COVID-19 infections, efforts were made to reduce interest rates on insurance policy loans.

Overseas, insurance premiums for policies expected to see a decrease in claims, such as automobile insurance, were discounted or partially refunded. Australia refunded unused travel insurance premiums and also discounted automobile insurance premiums. The United States, the United Kingdom, Italy, and Germany also reduced or refunded automobile insurance premiums.

Major insurance companies in various countries provided additional coverage to policyholders affected by COVID-19. In Korea, insurance companies recognized deaths caused by COVID-19 as accidental deaths rather than ordinary deaths. Latvia's insurance companies doubled the medical insurance coverage limits for COVID-19 infected individuals.

In France, companies with group insurance agreed that if pregnant women or chronically ill employees voluntarily stopped working to prevent COVID-19, insurance companies would pay part of their wages during unpaid sick leave. In Germany and Spain, insurance companies provided free insurance to healthcare workers exposed to COVID-19.

There were also cases where insurance companies voluntarily covered business interruption losses caused by COVID-19 under commercial property insurance. For example, in Switzerland, many insurance companies agreed to cover losses from restaurant business closures. Additionally, some German states agreed that insurance companies would pay 10-15% of business interruption losses.

Senior Research Fellow Yoon Sung-hoon of the Korea Insurance Research Institute stated, "The COVID-19 response principles of each country appear to be the same in terms of flexibility, timing, and communication with the industry," and advised, "Financial imbalances are deepening, such as the widening gap between the economy and asset prices, so preparations for this should also be made."

This content was produced with the assistance of AI translation services.